1.

Introduction
FACT a Government of India Enterprise has business interests in manufacturing and marketing of fertilizers,
caprolactam, engineering consultancy and fabrication of equipments. Units of FACT include the two
manufacturing divisions Udyogamandal Complex-UC and Cochin Division-CD, the consultancy unit FACT
Engineering and Design Organization-FEDO, the fabrication division FACT Engineering Works-FEW and the
Marketing Division. The Company has also interests in petrochemicals, hydrometallurgy,chemicals and
pharmaceuticals.
1. Overview
The Fertilizers And Chemicals Travancore Limited (FACT) incorporated in the year 1943 was one of the first
large scale fertilizer plants in India. Located at Udyogamandal, Kerala, FACT started production in 1947. Initially
in the private sector promoted by the Seshasayee Brothers, FACT became a PSU in the year 1960 and towards
the end of 1962, Government of India became the major shareholder of FACT.
From a modest beginning, FACT has grown and diversified into a multi-division/multifunction Organization with
core activities in manufacture and marketing of Fertilisers and Petrochemicals, Design, Engineering &
Consultancy and in Fabrication & Erection of Industrial Equipment.
The production and financial performance of the company for the year 2013-14 shows improvement as
compared to the previous year. During the financial year 2013-14 the production of Factamfos was 660079 MT
as compared to 537081 MT during the year 2012-13. Similarly the production of Ammonium Sulphate for the
year 2013-14 was 178792 MT as compared to 126238 MT during the year 2012-13. The financial results
(provisional) for the year 2013-14 shows a net loss of Rs. 274 crore as compared to Rs.354 crore during the
previous year.

FACT, India's first large scale fertiliser unit was set up in 1943. In 1947, FACT Udyogamandal started
production of Ammonium Sulphate with an installed capacity of 10,000 MT Nitrogen. FACT became a
Kerala State Public Sector Enterprise on 15th August 1960 and 21st November 1962, the
Government

of

India

became

the

major

shareholder.

The 2nd stage of expansion of FACT was completed in 1962. The 3rd stage of expansion of FACT
was

completed

in

1965

with

setting

up

of

new

Ammonium

Sulphate

Plant.

FACT Engineering and Design Organisation was set up on 24th July 1965 to meet the emerging need
for indigenous capabilities in vital areas of Engineering, Design and Consultancy for establishing large
and modern fertiliser plants. FEDO has since then diversified into Chemicals, Petrochemicals,
Hydrometallurgy, Pharmaceutical and other areas. FEDO offers services from project identification
and evaluation stage to plant design, procurement, project management, site supervision and
commissioning of new plants as well as revamping and modernisation of old plants.
th

FACT Engineering Works was established on 13 April 1966 as a unit to fabricate and install
equipments for fertiliser plants. Over the years FEW developed capabilities in the fabrication of
pressure vessels and heat exchangers. FEW has also undertaken laying of cross country piping and
fabrication

and

installation

of

large

penstocks

of

hydel

projects.

The Cochin Division of FACT, the 2nd production Unit was set up at Ambalamedu and the 1st phase

was commissioned in 1973. The 2nd phase of FACT Cochin Division was commissioned in 1976.

As a diversification plans from the traditional field of Fertilisers and Chemicals, 50000 TPA
Caprolactam

Plant

at

Udyogamandal

was

commissioned

in

1990.

FACT set up 900 TPD Ammonia Plant at Udyogamandal at a cost of 638 Crores following an order of
the High Court of Kerala in February 1994 on a Public Interest Litigation, to decommission the existing
imported Ammonia storage and handling facility at Willington Island (Cochin Port). The Ammonia
plant

was

commissioned

in

1998.

The company's main business is manufacture and marketing of (a) Fertilisers (b) Caprolactam and
Engineering Consultancy and Fabrication of Equipment.

2.

Vision / Mission

FACTs mission is to be a significant player in fertilizers, petrochemicals and other businesses such as
engineering and technology services.

3.

Industrial / Business Operations

a. Financial Performance
In Crore Rs.
Parameter

2012-13

Total Income

2013-14 (provisional)
2441

2378

Profit before Tax

(-)354

(-) 274

Net profit

(-)354

(-) 274

Dividend

Nil

Nil

Net-worth

(-)192

(-)466

b. Physical Performance
in LMT
Product

Production Capacity

Production Performance
2012-13

2013-14

Factamfos 20:20

633500

537081

660079

Ammonium

200000

126238

178792

50000

15544

Nil

Sulphate
Caprolactam

4.

Performance Highlights

The fertilizer production performance of the Company which was on an average level during the first quarter of
the financial year 2013-14 has improved steadily reaching excellent levels of production during the second and
third quarter of the financial year 2013-14.

Captive production of ammonia was stopped in January 2014 due to exorbitantly high price of LNG. To continue
production of fertilizers, FACT changed over its operations to imported ammonia. Operations with imported
ammonia limits the achievable production to around 75% of the normal production due to logistic constraints
affecting the maximum quantity of imported ammonia that can be handled and this has affected the production
th

during 4 quarter.
From the beginning of the year 2013-14 production of Ammonium Sulphate has been through the direct
neutralization route since caprolactam production was not on line.
During Financial Year 2013-14, FACT Marketing Division sold 6,27,996 MT Factamfos and 1,66,419 MT of
Ammonium Sulphate which are 16% and 23% higher respectively compared to last year. Bagged gypsum sales
were 44,524 MT clocking a growth of 60% over last year. The sale of organic manure during the year 2013-14
were 8,849MT against 4,550 MT during the previous year showing a growth of 95%. Total sales of bagged
products were 8,97,855 MT compared to 7,69,203 MT during the last year, which translates to a growth of
16.7%. FACTs Market Shares in South India for Complex 20:20 and Ammonium Sulphate for financial year
2013-14 were 30.90% and 79.11% respectively against 27% and 85% in financial year 2012-13. The entire sales
were on cash and carry basis.
Import of fertilizers was limited to one shipment of 25,963 MT of Complex 20:20:0:13.

5.

Strategic issues

FACT has successfully converted its ammonia plant operations to LNG as feedstock during September 2013 but
captive production of ammonia was stopped during January 2014 because of exorbitantly high cost of LNG. The
rd

delivered price of LNG from the 3 parcel offered by Petronet LNG Limited in January 2014 was around US$
24.35 per MMBTU, higher than even the Naphtha prices. FACTs request for compensation for the high cost of
LNG, to ensure a level playing field for its operations is under consideration of GOI. From January 2014
onwards fertilizer production is maintained using imported ammonia. The achievable production is limited to
around 75% of the normal production levels due to logistic constraints in ammonia movement and also delays
experienced in arrival of shipments due to extraneous reasons.
The company has submitted to a formal reference to Board for Industrial and Financial Reconstruction (BIFR) as
per the provisions of SICK Industrial companies (Special provision) Act 1985
To come out of the sickness and sustained operations, the Company has submitted a Financial Restructuring
Package to the Government of India which is under the consideration of the Government.
6. Human Resource Management
a. Manpower as on 31.3.2014

Group

Total employees Number of employees belonging to

SC

ST

Ex-Service

PH

OBC

390

57

10

58

1441

171

54

10

22

420

519

62

12

10

210

445

68

14

29

191

2795

358

90

22

60

879

TOTAL

Redressal of Public Grievances and Welfare Measures

A Public Grievance Cell is functioning in the Company, as per norms laid down by Government of India.

Employee Grievance Redressal Machinery

A machinery for redressal of employee grievances exists in the Company. Generally the grievances are related
to work, work place, shift arrangement, grant of increment, promotion, salary fixation, transfer, etc. An aggrieved
employee may submit a complaint / request for settling the grievance in the Division and if still aggrieved with the
decision

of

the

Division

Head,

it

may

be

submitted

before

the

appropriate

Grievance

Committee. Separate grievance committees exist for examining and redressal of grievances of managerial and
non-managerial employees. The individual concerned is given an opportunity to present his grievance in person
before the committee, if required. The respective Committee will deliberate on the grievance and give their
recommendations to the management for appropriate action. In addition, there is an SC/ST Grievance Cell that
looks into complaints received from SC/ST Employees.

Welfare of Minorities.
The Company had provided the following facilities for the Welfare of Minority Communities.
a)

Land for Mosque near FACT Junction, Udyogamandal

b)

Land for Christian Cemetery in Udyogamandal

c)

Pathway to St:Josephs Church near JNM Hospital, Udyogamandal.

d)

Land for CSI Church, Ambalamedu 25.51 cents

e)

Land for Catholic Church, Ambalamedu 44.73 cents

f)

Land for Marthoma Church, Ambalamedu 45.01 cents

g)

Land for Jacobite Syrian Church, Ambalamedu 40 Cents

h)

Land for Mosque, Ambalamedu 40 cents

I)

4 separate cemeteries to above 4 Christian Churches in Ambalamedu.

j)

Burial ground for Muslims (Khabaristan) in Ambalamedu

k)

Burial ground for Muslims in Udyogamandal

The premises and facilities such as Electricity, water etc. are extended free of cost.
Welfare, Development and Empowerment of Women

Employment of women employees in FACT and their profile

Equal opportunity has been provided to women in recruitment to posts both in technical and administrative
disciplines. Exception has been made only for jobs involving shift-work round the clock. Equal remuneration is
paid to employees of both genders doing the same type of work. There is no discrimination on grounds of
gender. This has enabled some of our women officers to excel in their respective field of activities leading to their
being chosen for the coveted Merit Award given for outstanding performance and achievements.

Women executives occupy key positions in the Management cadre as Joint General Managers, Chief
Managers/Chief Engineers & Dy.Chief Managers/ Dy.Chief Engineers in various Engineering disciplines like
Chemical, Electrical, Civil, Computer, Industrial Engineering etc. and administrative disciplines like Finance,
Human Resources, Materials, Marketing etc.
Statutory Welfare Measures implemented for Women employees.
Under the Maternity Benefit Act, women employees are entitled for maternity leave of 90 days and medical
benefits associated with pregnancy, delivery, miscarriage etc. Under the provisions of the Factories Act, the

working hours of women employees covered under the Act is restricted between 6 am and 7 pm. Nursing
mothers are given two intervals of 15 minutes each as feeding time, or alternatively as a working arrangement of
30 minutes at a stretch, for feeding their infants, up to a maximum of fifteen months after confinement.
As per GOI Orders, women employees undergoing family planning operation are given special leave up to 2
weeks.
A crche is also provided for the welfare of women employees.
Non-statutory Welfare measures implemented
for Women employees.
The Company sponsors a Ladies Club for the recreational activities of women employees and wives of male
employees. There is also an association of women employees, by the name FACT Women' Welfare Association,
whose activities are welfare oriented. Two buildings are allotted to FACT Womens Welfare Organisation at
concessional rate for running Womens hostel. Additional maternity leave of 45 days has been introduced for
mothers with less than 2 children.

Security at Work.
Based on the GoI Orders, there is a full fledged and active complaints Committee to look into complaints of
atrocities/harassment meted out to women employees at work place. Not less than half of the members are
women including an external member who is a lady Professor of a reputed Social Work College.

Welfare of SCs & STs

Employment / Fresh recruitment
The Company has taken all measures for maintaining reservation of SCs / STs in employment in accordance with
the Presidential directives. In view of the specific directions issued by the Government of India to fill the backlog
vacancies in recruitment reserved for SC / ST, a special recruitment drive was launched in the year 2008-2009
and so far 4 attempts were made for filling 56 such vacancies (31 SC & 25 ST). 4 ST vacancies were filled
during the year under report. So far, 31 SC & 19 ST candidates have been appointed. For filling the remaining 6
ST vacancies, action is in progress.

Training
In service training to company employees is arranged through the Training Department. Maximum representation
is ensured for SC / ST employees to attend in house training programme.
For engagement of Apprentices under the Apprentices Act, representation as per rules is provided.

SC / ST Grievance Cell
An SC / ST Grievance Cell is functioning at Corporate Level comprising the Chairman, who is also the Chief
Liaison officer for matters pertaining to reservation of SC / ST and their grievances in the company, Liaison
Officers of the various divisions and two Officers each belonging to SC and ST. The grievances received are
examined in detail by the Cell and appropriately redressed and if found necessary they are called by the cell to
present their cases in person. The employee concerned is informed of the decision / action taken on the
grievances by the Grievance Cell. Further, there are associations representing SC / ST employees and these
associations also take up individual grievances of SC / ST employees with the management for direct redressel.
Allotment of Residential Quarters
Due consideration is given for allotment of Residential Quarters to SC / ST employees. Details of residential
quarters allotted to SC/ST employees are given below.

Total Number of Employees Occupying Quarters

SC

ST

669

143

32

As on date no application for allotment of quarters received from SC/ST employees is pending.

Reservation of Dealership
During the financial year 2013-14 major thrust was given on appointment of Dealers under SC/ST categories.
Wide publicity through Website and Vernacular Press across southern states ensured for soliciting their
applications. Accordingly 122 (96 SC and 27 ST) dealers were appointed during the financial year 2013-14.

Roadmap for sustainability

In order to ensure the revival of FACT and help it sustain and grow over the years the company has drawn up a
roadmap outlining its path of progress. The scheme for the revival of FACT can be categorized as short term,
medium term and long term plans. These plans are expected to ensure the survival and growth of the company
helping it improve its turn over, productivity and profitability. The brief details of these plans are summarized
below:
Short Term Plan
FACT has requested the following assistance from the Government of
a)

India.

Sanctioning of the Financial restructuring proposal to prevent erosion of its net worth, reduce interest and

ease the working capital strain

b)

Providing a level playing field for LNG pricing by allocation of domestic gas or implementation of a price

support mechanism
c)

Plan fund support for essential renewals , replacements & other schemes

d)

Finalisation of an adequate compensation for Naphtha from 2010, which takes into account the increase in

the price of Naphtha and furnace oil in the place of the adhoc compensation
FACT is hopeful of receiving approval of these financial assistance paving way for operation of its plants in full
capacity and earn a reasonable profit on continuous basis.

Medium Term Plan

Ensuring availability of raw materials and removal of imbalances in Intermediates and enhancing NP
production capacity
One of the main reasons for the lower level of physical performance of the company has been the dependence
on imported raw materials, mainly phosphoric acid. The international phosphoric acid market is controlled by a
few big players who dominate and not only decide the pricing but also its availability. The company has drawn up
plans to reduce dependency on imported phosphoric acid by implementation of the following projects:
a)

Revamping the capacity of captive phosphoric acid production facility at Cochin division from 360 TPD to

500 TPD.
The present capacity of the phosphoric acid plant at Cochin division is 360 TPD. In order to meet the phosphoric
acid requirements, it is proposed to revamp the capacity of this plant to 500 TPD. Dependence on imported acid
will then be restricted to meet the balance requirements which will be manageable with existing suppliers. The
estimated investment for this project is Rs.145 crore. For this project, a DPR has been prepared by FEDO
based on the technical study report provided by the original process licensor in October 2012.
b)

Setting up a 2000 TPD Sulphuric acid plant to reduce imbalance in availability of Sulphuric acid

Implementation of this project intends to avoid imbalance between production and demand of Sulphuric acid for
meeting production requirements. Taking into consideration the revamp of the Phosphoric acid plant and
providing for expansion of NP capacity, it is proposed to set up a 2000 TPD Sulphuric acid plant at Cochin
division. The new 2000 TPD Sulphuric acid plant will not only help the company reduce dependency on external
Sulphuric acid but will also offer an opportunity to optimize cost by power generation from the waste steam which
is generated from the Sulphuric acid plant. The estimated cost of this project is Rs.330 crore.
c)

NP expansion at Cochin division

It is proposed to enhance the capacity of NP production at Cochin division by setting up a 1000 TPD NP plant.
The estimated investment for this plant is Rs. 200 crore.
FEDO has prepared a DPR for the project and conducted Environmental Impact Assessment study & Public
hearing. EIA report incorporating comments of public hearing has been submitted to Ministry of Environment
and Forest (MOEF) for final environmental clearance.
d)

Technological upgradation and optimization of plant capacities at Udyogamandal

It is also proposed to optimize the capacities of the old, small capacity plants at Udyogamandal by the following
strategies:

Setting up a high capacity Sulphuric acid plant at Udyogamandal catering to the requirement of Sulphuric acid,
oleum and sulphur dioxide in the complex. This plant will also aid in meeting the steam and power requirements
partly in the complex from the waste steam generated.

Setting up a 3000 TPD NP plant at Udyogamandal to replace the two low capacity plants presently in operation.
The sulphuric acid requirement for this plant will be met from the new sulphuric acid plant. The estimated
investment for this plant will be Rs.625 crore.
Pre feasibility study on these projects is completed. The implementation of schemes depend on the availability of
external Phosphoric Acid through outsourcing or Joint Venture. These projects have been conceived to address
the problem of vintage and sub optimal capacity of the existing plants at Udyogamandal.

Long Term Plan

Ammonia-Urea complex at Cochin Division
FACT was a manufacturer of Urea until 2003. The 1000 TPD Urea production was stopped in 2003 when the
operations became unviable under the Group pricing scheme. In order to restore its position in the Urea market in
the South, the company proposes to set up a 2800 TPD Ammonia plant coupled with a 3500 TPD Urea plant.
The sizing of the Ammonia plant will ensure meeting the Ammonia requirements for NP production and Urea
production at Cochin division. The Urea plant is assured of availability of feedstock LNG and infrastructure
facilities like land and utilities & railhead connectivity. The estimated investment for this project isRs. 5070 crore.
7.

Corporate Social Responsibility

During the year 2013-2014, the company continued to give priority on various social Responsibility measures
including supply of drinking water to more than 3000 households of Eloor Municipality .
During the financial year 2013-14 FACT continued its Village Adoption Programme. During the year FACT
adopted Attapadi Tribal village in Palakkad, Kerala. Various skilled activities are envisaged for tribal men and
women for their social upliftment in the adopted village.