Fertilisers and Chemicals Travancore Limited, which beat heavy odds to notch up commendable production and sales during 2014-15, has temporarily been rescued by a Rs. 450-crore Letter of Comfort from the Department of Fertilizers, which will cover expenses on purchase of raw materials and other inputs including natural gas.
Sources said on Tuesday that the Letter of Comfort had been issued to MMTC, for purchase of raw materials and natural gas and to a public sector bank, which extended a loan of Rs. 100 towards salary payments and pending dues for the month of April.
The Letter of Comfort is a brief spell of relief as the public sector fertiliser company braces up to face a grim future with near zero working capital and mounting debt burden. Sources said without urgent government intervention, it might not be possible for FACT to continue operations beyond mid June.
It is learnt that the company management had to scurry to raise money to pay salaries for the month of April. Salary and statutory dues amount to roughly Rs. 300 crore per annum.
Meanwhile, FACT has put up a good show in terms of production and sales despite the constraints it faced and stoppage of production till the fag end of the last financial year. Though the financial year ended with heavy losses, productivity and sales nearly topped normal levels.
Sources said there were serious difficulties linked to import of ammonia, the most important raw material for the company. These constraints were expected to curtail production to about 70 to 80 per cent of the normal levels.
But the company achieved a total sales turnover of over Rs. 2,000 crore. Factamfos production was more than six lakh tonnes and ammonium sulphate production stood at more than one lakh tonnes. These efforts were helped by the intervention of Union Minister for Fertilizers and Chemicals Ananth Kumar, by which natural gas was made available to FACT at $12.4 per mmBtu in February this year, the price being effectively $10.9 per mmBtu as the State government waived KVAT on the fuel