Fertilisers and Chemicals Travancore Limited (FACT) was founded in 1943 and has pioneered the culture of chemical fertilisers in India. Its chairman and managing director (CMD) Jaiveer Srivastava, who assumed charge recently, spoke to HT on a range of issues. Excerpts:
We have heard that FACT has been struggling hard to tide over several crises one after the other for quite some time. What is the current scenario?
I do not dispute your view. It is true that for the last one decade or so, this company has been plagued by several adverse factors. FACT used to make considerable profits continuously for decades. We slipped into the red after the commissioning of the 900 TPD ammonia plant at Udyogamandal. The high cost of Naptha, which is used for producing ammonia in FACT, is the main debilitating factor that stifles FACT's prospects. The price of Naphtha is hovering around R50,000 per tonne, whereas natural gas is available to the upper Indian fertiliser companies at around one-fourth of the price of Naphtha. If you look at the track record of the company for the last ten years, except during the preceding year, we have had satisfactory sales performance. During 2011-12, we generated a moderate profit of R19 crore out of a total sales turnover of Rs 2750 crore.
What about the fiscal 2012-13?
It was not a promising year for FACT. We could not operate most of the plants during the latter part of the year due to reasons which had a cascading effect on the performance of the company. Naphtha price had a rocketing tendency, which together with upward swing in the price of furnace oil, phosphoric acid etc. dealt a stunning blow. Since it was impossible to operate the fertiliser plants, we had no other option but to close down . More critical was the case of Caprolactam which had an international price of around $3000 per tonne which steadily fell below $2200. Against this fall in the international price was skyrocketing price of Benzene, the main raw material used in the production of Caprolactam. This double whammy was beyond all limits and we could not but close down the Caprolactam plant.
What about the fiscal 2012-13?
It was not a promising year for FACT. We could not operate most of the plants during the latter part of the year due to reasons which had a cascading effect on the performance of the company. Naphtha price had a rocketing tendency, which together with upward swing in the price of furnace oil, phosphoric acid etc. dealt a stunning blow. Since it was impossible to operate the fertiliser plants, we had no other option but to close down . More critical was the case of Caprolactam which had an international price of around $3000 per tonne which steadily fell below $2200. Against this fall in the international price was skyrocketing price of Benzene, the main raw material used in the production of Caprolactam. This double whammy was beyond all limits and we could not but close down the Caprolactam plant.
What is your strategy to bring back operations to normal?
We are following a multi-pronged strategy to revitalise the production activities. I am lucky to have an expert and dedicated team of colleagues who are leaving no stones unturned in our efforts to bring back production to normalcy. We have been closely following the international trends in the ammonia price. Since our ammonia plant is undergoing some basic changes in our effort to switch over to LNG within a couple of months, hence ammonia is currently imported. In the case of Caprolactam, we are exploring all possible options to restart production at least on a break-even level. Since Ammonium Sulphate, the second major fertiliser produced in FACT, is a co-product of Caprolactam, its production also depends on the prospects of the caprolactam price.
Recently you formed a joint venture with RCF Mumbai. How is that faring?
FACT formed a joint venture with RCF, Mumbai, for manufacturing load-bearing gypsum panels for building construction. This unit, known as FRBL, has been creating ripples in the building construction sector. This unit located at the Ambalamedu campus of FACT, is accepted as a strong alternative to conventional building construction. The comparative low cost, high speed in construction, savings in sand, steel, cement, bricks etc. will revolutionize the construction industry in this part of the country.