Fertilisers and Chemicals Travancore (FACT) Q4 02/03 earnings summary

Executive summary

• FY2002-03 ended with a Rs.199.93 crore loss after a working-capital crisis, input-cost pressure, subsidy reductions and production curtailments; net worth erosion exceeded 50% of its peak in the prior four years.

• The annual shutdown was advanced after production at all units was suspended around 20 February 2003 when the sole petroleum supplier stopped extending credit.

• A revival plan sought financial and organisational restructuring, cost reductions, manpower rationalisation and plant improvements to restore sustainable profitability.

Financial highlights

• Total income was Rs.1,143.17 crore versus Rs.1,389.13 crore in FY2001-02; net sales were Rs.919.37 crore versus Rs.946.82 crore.

• Loss before tax was Rs.199.93 crore versus a Rs.0.63 crore profit; loss after tax was Rs.199.93 crore versus Rs.0.57 crore profit.

• Fertiliser subsidy income was Rs.166.16 crore versus Rs.230.55 crore; other income was Rs.21.06 crore versus Rs.24.68 crore.

• Higher input costs added Rs.65 crore to costs; reduced subsidy realisation cut FY2002-03 sales receipts by Rs.33 crore, while delayed tariff implementation had cost Rs.40 crore on FY2001-02 sales.

Outlook and guidance

• The revival plan projected turnover rising from Rs.1,250 crore in 2005 to Rs.2,100 crore by 2010, with annual profit increasing from Rs.50 crore to Rs.200 crore.

• Planned actions included VRS for ~2,000 employees, imported ammonia use when cheaper than captive production, and upgrades to phosphoric-acid and sulphuric-acid facilities.

• A proposed Rs.340 crore complex-fertiliser and acid-plant programme was submitted to the Government of India for clearances.