BANGALORE, Dec 20: The problem with the BIFR revival package for Mangalore Chemicals & Fertilisers (MCF), the ailing UB group company, seems to have worsened with the Government of Karnataka asking for a period of two months to consider a proposal made by Kribhco. If the package is found unacceptable, then state government will consider a proposal by the UB group, according to a highly placed source.

The company was referred to the BIFR owing to an eroding net worth but has not yet received an acceptable package for a financial reform. The government of Karnataka will arrive at a decision on the proposal submitted by Kribhco, by February '98.

Members of the employees unions are also demanding more active participation in the talks. A delegation of union office bearers met chief minister JH Patel last week in this regard, according to a senior government official.

The unions successfully negotiated a four-year wage settlement with the management last month and all the demands of the workers were met including revision in pay scales and annual increments. The unions have received an increase in pay packet to the extent of Rs 2 crore per annum and the agreement is valid till the year 2000. This is in addition to an increase in professional pay, dearness allowance, house rent allowance, conveyance allowance and 32 other allowance, all of which will be part of the new settlement. The four unions involved in the negotiations are MCF Workers Union, MCF Employees, MCF Shramik Union and MCF Mazdoor Sangha.

According to sources, workers and employees alike feel that the plant has outlived its life and an investment of at least Rs 120 crore is required immediately in order to make the plant work.

The Kribhco package involves payment of Rs 306 crore by the state government. The company's demand to be allotted Rs 100 crore through 9.09 per cent preferential share ran into trouble as BIFR felt that the amount should be raised through debt or equity. The Rs 100 crore upfront subsidy along with Rs 15 crore annually for seven years has been objected to by the state government.

The UB group's proposal includes a revival plan involving an amount of Rs 105 crore with concessions worth Rs 113 crore from the state government.

Senior officials at MCF claim that the company is in the process of turning around with the company achieving a 3.42 lakh tonnes of urea production in 1996-97, the highest ever. The di-ammonium phosphate production was also high at 1.3 lakh tonnes. Operating profits for the year were Rs 26 crore with net profits at Rs 18 lakh. The company has already set a record in production of urea at 35,027 tonnes as on November 30, 1997. The company has received an award from the Fertilisers Association of India for `improvement in overall performance of a company'.

The UB group holds 16.32 per cent of the company's paid-up capital, while 46 per cent in held by financial institutions and 26 per cent by the public. The rest in held by the Government of Karnataka.

With things looking up, an early settlement of the BIFR package could save the company from running losses in the coming years, the official added.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.