Kerala - Kochi   

Price rise in raw materials hits FACT hard

Staff Reporter

Crisis a major setback for Factamfos sales

KOCHI: Fertilizers and Chemicals Travancore (FACT), hit by unprecedented rise in the price of key raw materials sulphur and rock phosphate, has called for help from the Union Government even as production of caprolactam and ammonium sulphate has come to a grinding halt. Production of Factamfos, the most popular brand of fertilizer mix from FACT, is likely to continue for another day with the sulphur that is in stock, company sources said. The unprecedented situation has also stalled the process of getting FACT’s ammonia plant running.

While top officials of the company are in Delhi to find a way to tide over the crisis, trade unions have reiterated a call for rationalisation of fertilizer subsidy. Subsidy for sulphur, promised and agreed to in principle by the Union Fertilizer Ministry, is yet to be translated into money, said a spokesman for the trade unions on Tuesday.

FACT sources said the present rise in the price of sulphur and rock phosphate will alone cost the company between Rs.60 crore and Rs.70 crore this year. Price of sulphur has gone up from $89 a tonne in June to $168 a tonne now and price of rock phosphate has gone up from $79 a tonne in June to $125. The crisis comes as a major setback to hopes of good Factamfos sales during the Khariff season.

The company expected to sell between 75,000 and one lakh tonnes in the State during the season while the company’s sales in South India were expected to be around five lakh tonnes.

Ammonium sulphate, urea and MoP are the major revenue earners for the company that has been at the receiving end of a flawed subsidy regime. While FACT gets subsidy for the two of the ingredients in Factamfos, it does not get subsidy for sulphur even though research has shown that sulphur supplement is essential for plant growth in around 40 per cent of the land in India.

FACT produces approximately eight lakh tonnes of Factamfos annually consuming about two lakh tonnes of sulphur and three lakh tonnes of rock phosphate. The company’s caprolactam production capacity is 50,000 tonnes annually while production of ammonium sulphate is in the range of 2.25 lakh tonnes.

FACT’s fortunes have also been hit by the use of naphtha as feedstock in place of natural gas that is used by upcountry fertilizer producers. Naphtha prices have been volatile pushing up cost of production and the commissioning of the LNG terminal in Kochi is expected only by the middle of 2010.

TUs demand

Meanwhile, trade unions cutting across political affiliations have decided to hold a meeting to draw the attention of the authorities and the public to the crisis being faced by Kerala’s premier public sector undertaking. The unions have sent messages to Chief Minister V.S. Achuthanandan and Leader of the Opposition Oommen Chandy on the crisis being faced by the company.

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