The commercial production of caprolactam is scheduled to commence from May 2020 with a production of 50,000 tonne and this will add Rs 500 crore to the top line.
Fertilisers and Chemicals Travancore (FACT) is all set to augment production of ammonium phosphate (Factamfos) by 50 % and revive caprolactam production after more than six years.
The Kerala-based public sector unit (PSU) is also set to invest Rs 700 crore for a greenfield factomfos plant and storage capacity. The revival of the caprolactam plant is expected to increase turnover of the company by `500 crore from the next fiscal, Kishor Rungta,chairman and managing director, FACT, said.
The PSU expects its top line to increase to Rs 2,400 crore in the current financial year from Rs 2,100 crore in the last fiscal. A net profit of Rs 164 crore in FY19 is estimated to almost double in FY20.
“Declining cost of feedstock LNG, lower number of employees and expansion of capacity will help us increase the profitability. Whatever we produce can be sold due to good brand value of FACT fertilisers in the southern markets,” he said, adding that that FACT is on course to achieve 1-million tonne production of its flagship ammonium phosphate fertiliser product Factamfos after nearly two decades in FY20.
FACT shifted to LNG from naphtha and furnace oil in 2013 and over the years, cost of LNG has dropped from $20 to $8 per mmbtu making production more profitable.
The commercial production of caprolactam is scheduled to commence from May 2020 with a production of 50,000 tonne and this will add Rs 500 crore to the top line. Competition from China and increase in raw material prices had forced the PSU to shut down the plant six years ago.
FACT is also planning to expand its footprints to eastern and western India. After decades, the company is also planning to recruit more than 200 employees including management trainees. Rungta added that the company had submitted its financial restructuring proposal to the fertiliser ministry, according to as the suggestions of Niti Aayog.
“We have asked the Union government to write off the interest portion and convert the principal of Rs 282 crore to equity,” he added.
The Cabinet has approved the sale of 481.79 acre held by the company to the government of Kerala.FACT will utilise Rs 700 crore from the sale proceeds of Rs 977 crore to construct a new plant and increase storage capacities of raw materials and finished products.