The Ministry of
Disinvestment has called for fresh Expression of Interest (EoI)
for disinvestment of 51 per cent shareholding in the Fertilisers
and Chemicals Travancore Limited (FACT). FACT, incorporated
in 1943, was set up as the country’s first large scale fertiliser
plant on the banks of the river Periyar at Udyogamandal near
Alwaye in Ernakulam District of Kerala. Initially promoted by
the Seshasayee Brothers, FACT became a Public Sector Company
in in 1960 and by 1962 the Government of India (GoI) became
the major shareholder. At present GoI holds 97.38 per cent of
the total paid-up equity of FACT.
Fact is the largest
manufacturer of Ammonium Phosphate Sulphate (a complex phosphate
fertiliser) in India with integrated plants for the production
of Sulphuric Acid, Phosphoric Acid and Ammonia. The Company
also manufactures nitrogenous fertilisers, viz. Urea and Ammonium
Sulphate. It is one of the only two manufacturers in India of
Caprolactam, a petro-chemical product which is the basic monomer
for the production of polymer nylon.
While the Company
has performed well in the past, its financial performance has
been affected in the last four years primarily on account of
high interest rate loan and increasing raw material prices.
Keeping in mind the long-term sustainability of the Company,
GoI has provided financial assistance in terms of waiver of
outstanding interest amounting to Rs.2, 268.80 million during
the year ending March 31, 2002. GoI may consider further financial
restructuring at the appropriate time.
The Government,
with the intention of inducting a strategic partner to hold
51 per cent of the equity in FACT, had invited EoI in November
2002. The Government has since taken a number of policy initiatives
relevant to the nitrogenous fertiliser industry including announcement
of Long Term Fertiliser Policy and notification relating to
changes in policy parameters under the 7th and 8th
pricing periods. As a result of this, there has been material
change in the prospective business and operating environment
of FACT, necessitating fresh invitation for EoI.
Interested Parties
can submit EoI either individually or as a consortium. Parties
who had expressed their interest in response to the earlier
advertisement could send letters to the Advisors confirming
their continued interest in the transaction. The last date for
the receipt of EoI is stipulated as February 26, 2003. Additional
information, including the Preliminary Information Memorandum
(PIM) is available with M/s. Deloitte Touche Tohmatsu India
Private Ltd, Advisors to Government of India. It can also be
accessed at the websites www.divest.nic.in,
www.fact.co.in,
or www.fert.nic.in.
