KOCHI: It looks like the death knell of the cash-strapped Fertilizers and Chemicals Travancore Ltd (FACT) is set to ring.
The public sector fertiliser company which has been struggling to survive is now facing the threat of being declared a sick unit.
Trade Union leaders and other stakeholders have received a notice from the Board of Industrial and Financial Reconstruction (BIFR) asking them to attend a hearing on September 16.
Industrial sickness simply means that a firm or an industry has been systematically making losses and the accumulated losses are going beyond its assets.
“The meeting is the first sign of spelling death for Fertilizers and Chemicals Travancore Ltd,” said George Thomas, a union leader. But the unions are still hopeful as the BIFR decision can be changed if the Union Government takes the final decision on the already announced revival package of `991 crore.
“Once it is labelled a sick unit, it will be very difficult or almost impossible to save or revive the company because banks or their consortium will not be ready to offer loans to meet the shortcomings in production. Gradually, it will lead to the death of the company,” said union leaders.
“The Union Government should immediately take steps to clear the `991 crore revival package before BIFR takes the decision to announce FACT a sick unit. Only if the package is declared, the company can escape from the tag,” union leaders said.
The revival package was approved by the Board for Reconstruction of Public Sector Enterprises (BRPSE) in December 2013
The fertiliser company has been awaiting the revival package for almost a year. Though the proceedings to clear the package reached the final stage, early this year, the Lok Sabha election was announced and period of the government expired. Union Minister for Fertiliser and Chemicals Ananth Kumar, visited FACT in July to review the situation.
In April this year, the crisis of the fertiliser company aggravated to an extent that it would be forced to stop production.
The immediate reason for the crisis is the high price of LNG supplied by Petronet LNG Ltd (PLL). FACT started using LNG for production of ammonia hoping to recover losses. Unable to bear the cost of liquified natural gas, the company closed down its ammonia plant and started importing it.