There was a great harvest for Fertilisers and Chemicals Travancore on Tuesday as the government put out advertisements inviting initial bids for a 51% strategic stake in the company.

The scrip of the state-run fertiliser major soared 18.28% to Rs 33 by 9:56 IST on the news. It recorded volumes of 1,100 shares on BSE by that time.

The current call for expressions of interest in FACT follows an earlier invitation on the same ground in November 2002.

The need for re-inviting EoIs was due to the government's policy initiatives relevant to the nitrogenous fertiliser industry including the announcement of the long-term fertiliser policy and notification relating to changes in policy parameters under the 7th and 8th pricing periods.

Interested parties will have to submit EoIs along with the request for qualification and details in the format specified in the preliminary information memorandum before 17:30 IST on 26 February 2003. Parties that had earlier filled in EoIs are now required to send a letter to the advisors to the divestment confirming their interest in the transaction.

At a recent Cabinet Committee on Disinvestment  meeting, the government allowed fertiliser co-operatives Iffco and Kribco and government controlled co-operatives - as an exception to the stated policy to bar PSUs from bidding - to participate in the divestment of FACT and other PSU fertiliser companies.

The Centre, on its initial invitation, had set a net worth criteria of at least Rs 200 crore (Rs 2 billion) and annual sales of Rs 600 crore (Rs 6 billion) during the last fiscal for eligibility for participation in the disinvestment process of FACT. It is believed that companies like Zuari Agro, Indo Gulf Fertilizers, Nagarjuna Fertilisers and Oswal had submitted initial bids in FACT on the earlier invitation.

In June 2002, the Cabinet Committee on Divestment  approved the divestment of the government's 51% equity stake in the Kerala-based loss-making company. CCD also permitted the government to tender some shares in the open offer to be made by the successful bidder, post-acquisition. Apart from this, the employees of FACT will be offered 2% of the government's stake at one-third the market price or the strategic sale price, whichever is lower, subject to the minimum par value.

The government holding in FACT is around 97.38%. Institutions and the public hold 1.43% and 0.4% stake, respectively.

FACT is the country's oldest fertiliser plant and has emerged as an efficient public sector unit. It produces urea, ammonium sulphate, soda ash, nitric acid and sulphuric acid. Launched in the 1940s as a single-product fertiliser giant at Udyogamandal (near Cochin), Kerala, it has grown into a composite fertiliser giant with its design and consultancy unit  and fabrication division, FACT Engineering Works.

For the third quarter ended 31 December 2002, FACT increased its losses to Rs 53.17 crore compared to a net loss of Rs 51.11 crore in the corresponding period last year. Sales dropped by 16.2% to Rs 283.69 crore (Rs 2.83 billion), from Rs 338.43 crore (Rs 3.38 billion) in DQ 2002.