Kerala cabinet has decided to waive off value added tax (VAT) on natural gas supplied to Fertilisers and Chemicals Travancore (FACT), raising the prospects of an immediate revival of the company, which is under the Board for Industrial and Financial Reconstruction net and faces serious financial trouble.
In an interview to CNBC-TV18, Jaiveer Srivastava, CMD, FACT, said the exemption will lead to a benefit of Rs 103 crore a year. He expects to see positive EBITDA next quarter.
The company plans to restart ammonia plant in 2-4 weeks and expects an output of 900 million tonne a day. The government has been deciding on the financial restructuring of the company, said Srivastava.
Below is the transcript of Jaiveer Srivastava's interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.Reema: Can you quantify the benefit that the company will get because of this waiver of the Kerala value added tax (VAT) on the natural gas supplied to the company?A: I am really glad that the state government has exempted our VAT and direct impact will be on the today’s rate it will be around Rs 103 crore per annum. Other most important thing is that our plant was closed for more than 11 months and it is going to restart, I am talking about the ammonia plant. Nigel: In the last quarter you made an EBITDA loss of around Rs 30 crore and you also stated that your plant has started functioning again. So, can we see a positive EBITDA numbers in the next couple of quarters at least?A: Definitely yes, because we are going to at least gain say something around Rs 8 crore per month after this particular VAT exemption. Then another important thing is we are now going to start our other plant also that is Caprolactam petro chemical plant.
Nigel: Then in the first quarter of next year that is in the final quarter of FY15 we can see a positive EBITDA?A: Definitely yes, it is going to improve in a big way.Reema: When will you restart your ammonia plant and what are the production as well as the expected revenues from this plant that you are going to be restarting?A: We are planning to start within a period of say two to four weeks because to restart this plant we again need Rs 5 to 7 crore and it is a process which may take about a week or so. Then the production is something around Rs 900 metric tones per day and this is going to help us in a big way because at the moment we are depended upon imported ammonia and imported ammonia neither we have enough storage nor the logistics. So, movement itself is a big issue a big question mark before us.Nigel: There was article in fact that had come in the news that you are looking to buy around 30 percent stake in Akron with various companies. Is that true are you forming any sorts of consortium?A: The news is very much right, under the consortium leadership of NMDC and another four of us that is National Fertilizers Ltd (NFL), Rashtriya Chemicals and Fertilizers (RCF), SIBCO and Fertilizers and Chemicals Travancore Ltd (FACT) we are in the process of at the moment. You can say it is the initial process let the things mature we will definitely come back to you.
Nigel: What is the total size that you are looking at with regards to this particular ticket? Some reports suggest that it could result in an investment of about Rs 1,000 crore. How much would be your part of that?A: Our is 10 percent out of the total so it is somewhere around Rs 100 crore.Reema: The company is also under Board for Industrial and Financial Reconstruction (BIFR). What is the current debt? How much money have you already got from on account of this restructuring in and being in BIFR? What is the plan going ahead? A: Our proposal is under the consideration of Union Government cabinet and for the financial restructuring of the whole of this company which is suffering because of one or the other reasons and there is lot of pressure because of the non availability of working capital. We are dependent on the banks and borrowing from them and it is very high interest that we are paying Nigel: You are sitting on 150 acres of land. There was a lot of toing and froing with regard to whether or not you could set up a propped petroleum coke based power plant that was got rejected. What is happening with that 150 acres?A: We have land but we need it for our expansion program which is under the consideration of the government, No doubt we have about 200 acres of our campus in Kochi itself and that is the thing ones it is something like win-win situation between the central government and state government we may discuss the things. However as far as our board is concerned it has not accepted by the board.
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