Govt to stand guarantee for bank loan.
Thiruvananthapuram: In a major relief to the Fertilisers and Chemicals Travancore (FACT), the Lok Sabha has passed the supplementary demands for grants which included a '1,000 crore loan to the ailing fertilizer manufacturer in Kerala.
The Bill, which got the assent of the Lok Sabha on Wednesday, will now go to the Rajya Sabha and to the President.
The passage of the supplementary grants will result in FACT getting cheaper loans on government guarantee to tide over its working capital requirements.
“This will help the company sign long-term contracts with suppliers, instead of resorting to spot purchases which are invariably costly,” FACT sources said.
“The loan will also help the company clear the dues to MMTC incurred for purchasing LNG. The ammonia plant has been shut for the last three months because of non-payment of the dues. The company can now hope to reopen it.”
The loss-making FACT has been bleeding thanks to its precarious financial position which the banks use as a ruse to charge higher interest rates.
“The banks used to charge up to 14.5 per cent owing to it being a loss-making one,” the sources said. “Last year, the interest outgo alone was over Rs 200 cores, which is suicidal for the company.”
FACT will now be able to repay some of the costly loans and bring down the interest outgo. This will also help make the working capital position bit comfortable.
The signal of the Central government help, which was under its active consideration for some time, came when Chief Minister Oommen Chandy met Union Ferlilisers Minister Anant Kumar last week.
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( Source : deccan chronicle )
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