The management of Hindustan Organic Chemicals will request the Union government to waive the demand for interest on interest for ₹241 crore as referred to in the annual report for 2017-18.
The report said the company had made provision for penal interest on government loans, but that no provision had been made for interest on interest, according to the sanction terms of the loan. Interest on interest had not been provided for from April 2001 to March 2018.
Company sources said the demand for penal interest amounted to a death knell for it, which had just come back from the brink of closure after years of loss-making. HOCL’s Kochi unit is the only unit in operation now, with the Rasayani plant having been shut down and scrapped in accordance with a government decision, sources said.
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The Kochi unit has made a profit of over ₹57 crore in the first half of the current financial year.
The unit expects to make a profit of over ₹120 crore by the end of the year with favourable market conditions prevailing. But the demand for penal interest has come like a bolt from the blue, trade union sources sources said here on Thursday.
The unit was on the brink of closure and had shut down operations on several occasions since 2012. However, the current year has been good, with the rising demand for phenol creating brisk business.
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While the plant operated at around 25% capacity in the last financial year, it has been operating at over 80% capacity in the current year. The HOCL unit produces 40,000 tonnes of phenol and 24,000 tonnes of acetone per month.
The good business atmosphere during the current year has also prompted the management to clear the salary and other arrears of employees to a large extent, trade union sources added. However, some part of the payment is still pending. There are around 200 employees at the HOCL unit.