The Kochi unit of Hindustan Organic Chemicals Limited has been given a lifeline by the Petroleum Ministry which has agreed to provide the struggling unit raw materials on credit for a month in April. The move comes after a delegation of trade union leaders called on the Petroleum Minister and reiterated their demand for help to run the unit.
The unit had started production of phenol in February, but it was stopped after 23 days. It was the fall in the price of phenol that forced the Kochi unit to stop production. However, trade union sources claimed that the unit was able to make a profit of Rs. 1.75 crore during the period, which has generated confidence that the unit can be run profitably with the right market conditions.
The market had also seen a rise in the price of raw materials along with the fall in the price of phenol. The HOCL unit had been relying on advances from its product buyers to source raw materials. However, with the change in market conditions, the buyers are averse to advancing money, trade union sources said.
The HOCL unit had restarted the production of phenol, acetone and hydrogen peroxide in February after a long gap. Market conditions were favourable during that time and it was expected that the favourable condition would prevail. The Kochi unit had been making profit from 2011-12 and the unit had accumulated profit.