India’s commitment to climate change just shut this PSU

The Union Cabinet on Wednesday ordered closure of Hindustan Fluorocarbons (HFL), a maker of the ozone-depleting gas called hydrochlorofluorocarbon (HCFC-22) that is used in refrigeration. Under the provisions of Montreal Protocol on phasing out of substances harmful to the layer protecting the earth, HFL is allowed to produce only 282 tonne of the gas per year from April onwards, not enough to keep the company sustainable. The government is thus left with no option but to order its closure.

HFL, a subsidiary of state-owned Hindustan Organic Chemicals Limited, has its sole plant located at Rudraram in Telangana’s Sangareddy district. The company has been making losses since 2013-14 and has a negative net worth. As on 31 March, 2019, it had accumulated losses of Rs.62.81 crore and a negative net worth of Rs.43.20 crore.

A government release said the government will appoint NBCC (India) Ltd as a land management agency to facilitate disposal of HFL’s land assets, subject to outcome Telangana government’s decision on purchasing land of HFL.

The government will offer a voluntary retirement scheme to all the company staff. It has set aside an interest-free loan of RS.77.20 crore for this purpose as well as payment of salary and statutory dues.

The company will pay back this loan and another debt of ₹15.80 crore from the proceeds arising out of the land sale. If it still falls short, that amount will be written off.

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