Statement to be made by Shri Sis Ram Ola, Minister of State of the Ministry of Chemicals & Fertilizers in Lok Sabha on 16.5.1997 in response to the Calling Attention Notice tabled by S/Shri Sriballav Panigrahi, Basudeb Acharia and Haradhan Roy on the situation arising out of non-revival of the sick units of the Indian Drugs and Pharmaceuticals Limited, Hindustan Fertilizer Corporation and Fertilizer Corporation of India and the steps taken by the Government in regard thereto.

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    The situation prevailing in the sick pharmaceutical and fertilizer undertakings under the administrative control of the Ministry of Chemicals & Fertilizers has time and again engaged the attention of this August House. Concerted efforts have been made by the Government towards the rehabilitation of these companies. As an interim measure, all possible support has been extended within the constraint of budgetary resources to sustain the operations of the functional units of the sick public undertakings.

2.  The situation in regard to Indian Drugs and Pharmaceuticals Ltd. (IDPL) is as follows:

Indian Drugs & Pharmaceuticals limited (IDPL) which has been incurring losses almost continuously since its inception, was declared sick by the Board for Industrial and Financial Reconstruction (BIFR) in August 1992. BIFR approved a revival package prepared by the IDPL management. As a part of this revival package, significant capital restructuring involving Rs. 435 crore was undertaken. in addition, as against fresh financial assistance of Rs. 119.94 crore, as envisaged in the package, Government extended financial assistance to the tune of Rs. 140.31 crore during the years 1993-94 to 1995-96.

Inspite of  Financial Assistance and the capital restructuring, IDPL could not achieve the targets set for the first year. A modified revival package submitted by IDPL management has been vetted by IDBI as Operating Agency and the matter pertaining to the revival of  IDPL is at the moment under the achieve consideration of the Union Cabinet/Government.

To help IDPL overcome its problems, the Government provided a sum of Rs. 33.02 crore to IDPL during 1996-97. Government has released funds to IDPL to pay the salaries till March 1997. Further funds will also be released to pay the salaries of April, 1997, after the Union Budget is passed.

3. .  In so far as the fertilizer undertakings are concerned, the prevailing situation is as follows.

The Fertilizer Corporation of  India Ltd. (FCI), which comprises the three functional units of Sindri, Ramagundam and Talcher and the closed unit of Gorakhpur, had accumulated losses of Rs. 3408 crore as on 31.3.97 against its authorised capital of Rs. 800 crore. The company was declared sick by the BIFR in 1992. The Gorakhpur unit has not  been able to resume production after an accident in June 1990. The total workforce of FCI is 7533.

A provision of Rs. 332 crore has been made in 1997-98 to provide budgetary support to FCI  for meeting essential capital expenditure and covering the cash losses incurred by the company.

The functional units of Hindustan Fertilizer Corporation Ltd. (HFC) are located at Namrup, Durgapur and Barauni. The Namrup complex has three plants, out of which Namrup II is closed since August 1994 on account of gas limitation. HFC also has completed but uncommissioned project at Haldia. HFC had accumulated losses of Rs. 3610 crore as on 31.3.97 against its authorised capital of Rs. 750 crore. The company was declared sick by the BIFR in 1992. The total workforce of HFC is 8483.

A provision of Rs.184.34 crore has been made in 1997-98 to provide budgetary support to HFC for meeting essential capital expenditure and covering the cash losses incurred by the company.

The capacity utilization in the functional units of FCI & HFC has been low due to problems of obsolescence and constraint of infrastructure and liquidity.

The revival packages formulated in April 1995 for the rehabilitation of FCI and HFC envisaged the limited revamp of their functional units mentioned above. The requirement of fresh investment was estimated at Rs. 1736 crore for FCI. The revamp of Gorakhpur unit was not found feasible as it would have entailed the setting up of new ammonia-urea plant. The requirement of  fresh investment for HFC units was estimated at Rs. 465 crore. The revamp of Haldia project was not found to be techno economically viable. These revival packages could not be implemented for want of funding tie up.

An expert Group under the leadership of Industrial Credit & Investment Corporation of India Ltd. (ICICI) was thereafter constituted to reformulate the revival package from the standpoint of funding by Financial Institutions (FIs). The expert Group has put the requirement of Fresh investment for the revamp of Sindri, Ramagundam and Talcher units of FCI at Rs. 2638 crore and that for the revamp of Namrup, Durgapur and Barauni units of HFC at Rs. 869 crore. In addition, various other financial reliefs and concessions in terms of write off of GOI loans and accumulated interest aggregating to Rs. 5006 crore are envisaged to make these packages viable.

Given the magnitude of the fresh investment and other reliefs required, a due diligence exercise bearing on the multiple dimensions of the issue has been undertaken in the Government. Inter-ministerial consultations have focussed on the economics of different options available. For reasons of budgetary constraints, efforts are being made to optimise the participation of FIs in the rehabilitation schemes. The operating agency appointed by the BIFR is also engaged in formulating draft schemes for the revival of these companies. The Government is committed to bring about an expeditious and judicious decision of this complex issue in the overall national interest.