Financial Daily from THE HINDU group of publications
Wednesday, Jun 01, 2005
Financial Daily from THE HINDU group of publications Wednesday, Jun 01, 2005 |
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Corporate
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Sick Units `FACT facing liquidity crisis' G.K. Nair
Kochi , May 31 THE lukewarm attitude of the Centre towards taking a final decision on the revival of the ailing Fertilisers and Chemicals Travancore Ltd (FACT) at nearby Udyogamandal will land the company in serious liquidity problems, according to Mr K. Chandran Pillai, CITU leader and Rajya Sabha Member. The situation has reached such a stage that the company had to resort to advance realisation from the market to pay the salaries of its employees, Mr Pillai, who has been pursuing the issue for long at various levels, told Business Line on Tuesday. "Taking money in advance from the market and utilising it for purposes other than purchase of raw materials will aggravate the liquidity crisis," he added. "In fact, this could result in shortage of raw materials, which in turn would hit the productivity of the company." When the Board for Reconstruction of Public Sector Enterprises (BRPSE) was constituted, expectations were that quick decisions would be taken to revive the ailing Central PSUs, including FACT. But the BRPSE, due to lack of adequate infrastructure and support, has not been able to produce the desired results so far, he said. "The inordinate delay in taking a final decision to revive the pioneer fertiliser company has created an impression in the State that the Government is not interested in reviving the unit," Mr Pillai said. He claimed that in the case of reviving the FACT, the Centre would not have to dole out any funds. "The basic requirements for reviving the company are to convert the Central plan loan to equity besides facilitating supply of raw materials at affordable price and making available the required working capital." He said that if the proposal submitted by Rashtriya Chemicals and Fertilisers (RCF), which had been approved by the FACT Board, were implemented, the company could make a turnaround in about three years. "But it is still lying with the BRPSE for recommendations." According to the proposal, he said, the management responsibility would be entrusted to RCF for a limited period of 2-3 years under a contract between the two companies. During this period, RCF would be paid a fixed fee of one per cent of the annual turnover of FACT and this amount would be remitted in 12 equal monthly instalments. RCF has to help the company make a turnaround within the stipulated period and hand over the management to the FACT management team. According to company sources, RCF had provided financial assistance to the company to meet its working capital requirements in the fiscal gone by.
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