The Budget for 2016-17 was truly a Budget for Bharat, as it not only increased allocation for rural infrastructure and social schemes, but also tried to address the problems of sectors that are directly related to the agriculture segment, including fertilisers. State-owned Fertilisers and Chemicals Travancore Ltd (FACT) has signed a memorandum of understanding with the Department of Fertilisers for a ₹1,000-crore loan.
Speaking to Bloomberg TV India, FACT Chairman and Managing Director Jaiveer Srivastava said the company will use the loan to repay its old debt, reduce the interest cost and scale up operations.
FACT, which is now operating at the level of 6-7 lakh tonne, is planning to ramp up production to 1 million tonne in FY17, he said.
The government was kind enough to extend this loan of ₹1,000 crore.
What has happened actually is our bank borrowing has increased too much and we have to reduce it to run the company in a viable manner.
We require working capital to run our operation. If it is not available, we cannot operate in a right manner.
So this loan from the government is going to help us in a big way.
At what capacity are you operating right now? Are you going to use the ₹1,000 crore you are getting from the government just to pay back loans or are you going to spend it on working capital as well? And would that be enough or would you need another infusion?
It is just the beginning towards the revival of the company. The company has been suffering for almost 19 years.
This help is going to increase our production. Today, we are operating at the level of 6-7 lakh tonne, which we are going to target to increase to 1 million tonne in FY17.
Most important, with the government support, our interest cost is going to come down. We are paying ₹200 crore in interest on the borrowing from various banks.
So, at least 50 per cent of the interest is going to come down. And if working capital is available, then we are at ease as far as procuring raw materials is concerned.