Lok Sabha Question No. 328 (UNSTARRED), answered on 2016-07-19
Subject: Revival of PSUs
Ministry: CHEMICALS AND FERTILIZERS
Asked by: SHOBHA KARANDLAJE

## GOVERNMENT OF INDIA MINISTRY OF CHEMICALS & FERTILIZERS DEPARTMENT OF FERTILIZERS

## LOK SABHA

## UNSTARRED QUESTION NO. 328

TO BE ANSWERED

ON: 19.07.2016

## Revival of  PSUs

## 328.   KUMARI SHOBHA KARANDLAJE:

Will the Minister of CHEMICALS AND FERTILIZERS be pleased to state:

- (a) the total number of Public Sector Undertakings (PSUs) under the Ministry  along with the number of those making profit and losses, separately, sectorwise;
- (b) the action plan formulated to revive the loss making PSUs and make them viable venture and the details of flagship programmes implemented under  the Ministry; and
- (c) the funds allocated, utilized and unutilized in this regard during each of the last three years and the current year, programme-wise and the steps proposed to be taken by the Government to promote PSUs?

## ANSWER

MINISTER  OF  STATE  IN  THE  MINISTRY  OF  CHEMICALS  &  FERTILIZERS, SHIPPING, ROAD TRANSPORT & HIGHWAYS

## (SHRI MANSUKH L. MANDAVIYA)

- (a) There are 18 PSUs under the administrative control of the Ministry of Chemicals & Fertilizers.  A detail containing profit/loss status of these PSUs is as under:
- (b): Action taken by the Government to revive the loss-making PSUs:

| S. No.                    | Name of PSU                                               | Profit making/loss making (as 31.03.2016)                                                       |
|---------------------------|-----------------------------------------------------------|-------------------------------------------------------------------------------------------------|
| Department of Fertilizers | Department of Fertilizers                                 | Department of Fertilizers                                                                       |
| 1                         | Brahmaputra Valley Fertilizer corporation Limited (BVFCL) | Profit making                                                                                   |
| 2                         | The Fertilizers And Chemicals Travancore Limited (FACT)   | Loss making                                                                                     |
| 3                         | FCI Aravali Gypsum and Minerals India Limited (FAGMIL)    | Profit making                                                                                   |
| 4                         | Fertilizer Corporation of India Limited (FCIL)            | All units of FCIL are lying closed, However, after financial restructuring the net worth of the |

|                                          |                                                                    | company has become positive.                                                                                                                                                                                                                                                    |
|------------------------------------------|--------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 5                                        | Hindustan Fertilizer Corporation Limited (HFCL)                    | All units of HFCL are lying closed, However, after financial restructuring the net worth of the company has become positive                                                                                                                                                     |
| 6                                        | Madras Fertilizers Limited (MFL)                                   | Loss making                                                                                                                                                                                                                                                                     |
| 7                                        | National Fertilizers Limited (NFL)                                 | Profit making                                                                                                                                                                                                                                                                   |
| 8                                        | Projects & Development India Limited (PDIL)                        | Loss making                                                                                                                                                                                                                                                                     |
| 9                                        | Rashtriya Chemicals & Fertilizers (RCF)                            | Profit making                                                                                                                                                                                                                                                                   |
| Department of Chemicals & Petrochemicals | Department of Chemicals & Petrochemicals                           | Department of Chemicals & Petrochemicals                                                                                                                                                                                                                                        |
| 10                                       | Hindustan Fluorocarbons Ltd. (HFL)                                 | Loss making                                                                                                                                                                                                                                                                     |
| 11                                       | Hindustan Organic Chemicals Ltd.(HOCL)                             | Loss making                                                                                                                                                                                                                                                                     |
| 12                                       | Hindustan Insecticides Ltd(HIL)                                    | Profit making                                                                                                                                                                                                                                                                   |
| 13                                       | Bhramaputra Cracker & polymer Limited (BCPL)                       | BCPL is implementing the Assam Gas Cracker Project. The Project has been commissioned on 02.01.2016. The Plant has capacity of producing 2.8 lakh MTs of polymer annually and is presently under stabilization. Hence, the question of making profits and losses doesn't arise. |
| Department of Pharmaceuticals            | Department of Pharmaceuticals                                      | Department of Pharmaceuticals                                                                                                                                                                                                                                                   |
| 14                                       | Karnataka Antibiotics & Pharmaceuticals Limited (KAPL), Bangalore. | Profit making                                                                                                                                                                                                                                                                   |
| 15                                       | Rajasthan Drugs & Pharmaceuticals Limited (RDPL), Jaipur.          | Loss making                                                                                                                                                                                                                                                                     |
| 16                                       | Hindustan Antibiotics Limited (HAL), Pimpri, Pune                  | Loss making                                                                                                                                                                                                                                                                     |
| 17                                       | Bengal Chemicals & Pharmaceuticals Limited (BCPL), Kolkata         | Loss making                                                                                                                                                                                                                                                                     |
| 18                                       | Indian Drugs & Pharmaceuticals Limited (IDPL), Gurgaon             | Loss making                                                                                                                                                                                                                                                                     |

## Fertilizer PSUs

- I. The Fertilizers and Chemicals Travancore Limited (FACT) :

For  the  financial  restructuring  of  FACT,  a  proposal  for  revival  of  the  company involving waiver of GoI loans and interest, granting one-time compensation for use of liquefied Natural Gas (LNG) and issuance of sovereign guarantee so as to come out of Board for Industrial and Financial Reconstruction (BIFR) has been finalized and under inter-ministerial consultation. The proposal also includes Ín principle 'approval for sale/ leveraging  of  land  for  raising  resources  to  repay  the  loans  raised  against  sovereign guarantee and to raise funds for implementation of short/ medium & long term proposed projects.  However,  to  avert  immediate  crisis,  GoI  has  sanctioned  a  plant  loan  of  Rs. 1000 Crore to FACT.

## II. Madras Fertilizers Limited (MFL):

MFL  started  incurring  losses  in  the  year  2003-04  and  declared  Sick  in  2009. Though the Company earned operating profit in 2012-13 & 2013-14, however, the networth of the Company is still negative. In terms of DPE guidelines on streamlining the mechanism for revival and restructuring of sick Central Public Sector Enterprises, DOF has approved to engage an external expert agency which has experience and expertise of the business environment, operational issues, technology option and financial viability of the sector in which such CPSE is working.  Accordingly, as directed by DoF, MFL has engaged PDIL as expert agency on 02.06.2016.

## III.     Hindustan Fertilizer Corporation Ltd.

The company was declared sick by the BIFR in 1992. The Government declared closure  of  all  units  namely  Barauni,  Haldia  and  Durgapur  units  of  HFCL  in  2002.  To bring the company out from the purview of BIFR, the union Cabinet in its meeting held on  25.05.2016  has  approved  the  proposal  of  DoF  for  financial  restructuring  of  HFCL which inter-alia includes waiver of GoI loan & interest thereon. Recently, the Cabinet in its meeting held on 13.07.2016 has approved the revival of Gorakhpur and Sindri unit of FCIL and Barauni unit of HFCL through Special Purpose Vehicle (SPV) of profit making PSUs on nomination route

.

## Chemicals & Petrochemical PSUs:

HOCL and HFL are sick PSUs and are registered with BIFR as sick companies. The details of which are as under:

## I. Hindustan Organic Chemicals Ltd. (HOCL):

- (i)          In  2001,  the  Govt.  of  India  provided  guarantee  for  Rs.100  crore  for  raising resources from the capital market.
- (ii)    Following rehabilitation package was approved for the company in March, 2006:
- (a) Fund infusion of Rs.250 crore (preferential shares)
- (b) Non-cash transaction - Continuation of the Govt. guarantee for Rs.100 crore (given in 2001) for 10 years and waiver of interest and penal interest
- (iii)          In  February,  2007,  the  Govt.  approved  investment  of  Rs.20  crore  (preference shares) for restarting the Caustic Chlorine plant at Rasayani unit of the company.
- (iv)     Govt. on 01.08.2013 approved the following revision of terms and conditions of the rehabilitation package of 2006:
- (a)            Postponement  of  the  redemption  of  Rs.270  crore  preference  shares, that was due for redemption from 2011-12 onwards, to 2015-16 onwards
- (b)            Extension  of  Govt.  guarantee  of  Rs.100  crore  for  5  more  years  i.e.  up to 28.08.2017
- (v)     In July, 2014, Govt. further gave guarantee for Rs.150 crore for issue of bonds by the company for meeting the working capital requirement, repayment for raw material suppliers, bank loans, employees' dues etc.
- (vi)      In  September,  2015,  the  Govt.  paid  annual  interest  of  Rs.10.57  crore  on  the Rs.100 crore  bonds and  Rs.14.04  crore  on  the  Rs.150  crore  bonds  as  the  company failed to pay both the amounts due to lack of sufficient funds.
- (vii)    In view of the continuing losses of HOCL, a restructuring plan for the company is under consideration of the Government.

## II. Hindustan Fluorocarbons Ltd. (HFL):

- (i) A  rehabilitation  package  for  HFL  was  approved  by  BIFR  on  03.12.2007  at  a total  cost  of  Rs.19.28  crore  comprising  of  Capital  Expenditure  (Rs.8.99  crore),  One Time Settlement (OTS) of banks & financial institutions (Rs.4.67 crore), VRS payment (Rs.4.00 crore) and Working capital (Rs.1.62 crore).
- (ii) Further, for revival and growth of HFL, the company is diversifying into making products which can be sold in niche market with more margins as compared to PTFE (Poly Tetra Fluoro Ethylene). Therefore, company is focusing on development of fluoro specialty  chemicals,  wherein  contribution  is  more  as  compared  to  PTFE,  and  has already  developed  TFE-ETHER,  Telomeres  etc.  HFL  has  also  developed  advanced grades of PTFE i.e. Modified PTFE (MPTFE), which has higher margins than ordinary PTFE. Plan loan of  Rs.16.80  crore  was  provided  by  the  Govt.  to  HFL  in  2014-15  for plant refurbishment schemes & new initiatives and for development of modified PTFE.
- (iii) Plan loan of Rs.16.80 crore was provided by the Govt. to HFL in 2014-15 for plant refurbishment schemes & new initiatives and for development of modified PTFE.
- (iv)     In view of the continuing losses of HFL, a restructuring plan for the company is under consideration of the Government.

## Pharmaceutical PSUs

Bengal  Chemicals  &  Pharmaceuticals  Limited  (BCPL): -  Revival  Plan  is  under implementation.

Rajasthan  Drugs  &  Pharmaceuticals  Limited  (RDPL),  Jaipur:  plant  is  being supported  to  become  WHO-GMP  compliant.  For  this  purpose  Rs.  6.84  crores  was released as Grants-in-Aid in 2014-15

Hindustan  Antibiotics  Limited ( HAL)/Indian  Drugs  &  Pharmaceuticals  Limited ( IDPL): -  Notes  for  revival  of  both  the  companies  have  been  submitted  to  Cabinet Secretariat for consideration.

There  is  no  flagship  programmes  under  implementation  of  the  Ministry  of Chemicals & Fertilizers.

- (c): Department wise reply is as under: -

Department of Fertilizers : Fund sanctioned/released to BVFCL, FACT and MFL is as under:

(Rs. in Crores)

| Name of Company   | 2013-14   | 2013-14   | 2013-14   | 2014-15   | 2014-15   | 2014-15   | 2015-16   | 2015-16   | 2015-16   |
|-------------------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|
| Name of Company   | B.E       | R.E       | Actual    | B.E       | R.E       | Actual    | B.E       | R.E       | Actual    |
| BVFCL             | 25.00     | 0.91      | 0.00      | 10.00     | 0.24      | 0.00      | 5.01      | 0.00      | 0.00      |
| FACT              | 211.43    | 0.01      | 0.00      | 42.66     | 0.01      | 0.00      | 34.99     | 1000.00   | 0.00      |
| MFL               | 17.00     | 0.01      | 0.00      | 30.00     | 0.01      | 0.00      | 10.00     | 0.00      | 0.00      |

In the current Financial Year, Rs. 1 Crore has been allocated to BVFCL in B. E. 201617. However, there is no provision for plan loan to MFL and FACT in the Demand for Grants for 2016-17 of this Department. No funds have been released from 2012-13 on wards  to  the  loss  making  PSUs  in  view  of  the  restrictions  imposed  by  Ministry  of Finance  vide  D.  O.  letter  No.  F.2(41)-B(SD)/2012  dated  20.09.2012  except  FACT wherein Rs. 1000 crore was released in 2 nd R. E. 2015-16.

Department of Chemicals & Petrochemicals: Funds sanctioned / released to HOCL and HFL during the last two years and current year are given in the following table:

( Rs. in crore)

| Sl. No.   | Name of PSU   | 2013-14 (Actual)   | 2013-14 (Actual)   | 2014-15 (Actual)   | 2014-15 (Actual)   | 2015-16 (up to 31.12.2015)   | 2015-16 (up to 31.12.2015)   |
|-----------|---------------|--------------------|--------------------|--------------------|--------------------|------------------------------|------------------------------|
|           |               | Plan               | Non- Plan          | Plan               | Non-Plan           | Plan                         | Non-Plan                     |
| 1.        | HOCL          | --                 | --                 | --                 | --                 | --                           | 24.61                        |
| 2.        | HFL           | --                 | --                 | 16.80              | --                 | --                           | --                           |

In the current Financial year 2016-17, against the allocation of Plan funds of Rs.25 crore for HOCL, no funds have been released as on 13.7.2016. No funds have been allocated HFL in BE 2016-17.

Department of Pharmaceuticals: Funds sanctioned / released to BCPL, RDPL and KAPL during the last two years and current year are given in the following table:

( Rs. in crore)

| Sl. No.   | Name of PSU   | 2013-14 (Actual)   | 2013-14 (Actual)   | 2014-15 (Actual)   | 2014-15 (Actual)   | 2015-16 (up to 31.12.2015)   | 2015-16 (up to 31.12.2015)   |
|-----------|---------------|--------------------|--------------------|--------------------|--------------------|------------------------------|------------------------------|
|           |               | Plan               | Non- Plan          | Plan               | Non-Plan           | Plan                         | Non-Plan                     |
| 1.        | BCPL          | --                 | --                 | 7.00               | --                 | --                           | -                            |
| 2.        | RDPL          | --                 | --                 | 6.84               | --                 | --                           | --                           |
| 3.        | KAPL          | -                  | -                  | -                  | -                  | -                            | -                            |

In the current financial Year 2016-17, no funds has been released to any PSUs till date .

**********