The Hindu : Business : RCF to manage FACT

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Thursday, Jul 14, 2005

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Business

RCF to manage FACT

BRPSE recommendation will go to the Cabinet for approval

NEW DELHI: To turnaround ailing Fertilizer and Chemicals Travancore Ltd., the Government will hand over its management to Rashtriya Chemicals and Fertilizers (RCF).

"The RCF will take over FACT under management contract and implement the package of revival of the company," an informed source told PTI.

The proposal to take over FACT was mooted by the RCF. However, the Ministry of Fertilizers and Chemicals under which both companies function had some doubts whether it was legally possible.

The Board for Reconstruction of Public Sector Enterprises (BRPSE) came up with a solution. It recommended that FACT be handed over to the RCF under management contract. The recommendation of the BRPSE will now go to the Cabinet for approval.

The revival package of FACT, approved by the BRPSE, also include converting a part of the liabilities to the Government, which run in to Rs. 609 crore, into equity.

If the Government equity is hiked, FACT will be able to approach financial institutions for fresh working capital.

The Kochi-based FACT has been in the red for over a decade. The company posted a net loss of Rs. 88.72 crore for the year ended March 31, 2005 against a net loss of Rs. 167.22 crore in the previous fiscal.

Total income in 2004-05 has increased to Rs. 1196 crore from Rs. 943 crore in 2003-04.

In the last quarter of 2004-05, however, the company posted a net profit of Rs. 43.67 crore against a net loss of Rs. 117.54 crore.

The RCF, on the other hand, is doing well financially and paying dividends. — PTI

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