spic

Southern Petrochemical Industries Corporation Ltd., or SPIC, is an Indian company that makes petrochemicals. Its core competency is its fertilizer portfolio. It also has operations in the areas of power, oil and natural gas, pharmaceuticals, and biotechnology applications in agriculture.

The company, headquartered in Chennai, was started in 1975 as a joint venture between the M. A. Chidambaram Group and TIDCO (a part of the Government of Tamil Nadu). The Government sold its stake in 1992. The company's biggest client has traditionally been the Government of Tamil Nadu, which purchases agro-products for subsidized distribution through its Public Distribution System. The company has been in poor financial health since about 2002. Its 2006 sales amounted to INR 22 billion, with a net operating loss of INR 1.8 billion. It may currently be acquired by the Oil and Natural Gas Corporation, a public sector corporation.

Asset Reconstruction Company of India (ARCIL) has formally decided to put Southern Petrochemical Industries Corporation (SPIC) on the block, after failure of several attempts to restructure the debt and jump-start the fertiliser plants.

According to sources, investment banker SSKI has been mandated by ARCIL to find suitors to the beleaguered fertiliser major. "Not just us, SSKI has been mandated by the promoters too," sources in ARCIL told TOI. It is learnt further that an information memorandum is being prepared by the merchant banker to be circulated amongst probable bidders.

AC Muthiah, chairman of SPIC, could not be reached for his comments. "Given the current market scenario, I do not foresee anybody making an aggressive bid to the take over the company. There exists a strong possibility to ring fence some assets and sell them piece meal to interested buyers. Even here, for a deal to happen, valuation holds the key," a source added.

SPIC's problems are two fold: First is to clear existing debt and second invest more to convert the existing naphtha-based operations to gas-based.

As of March 2008 balance sheet of the company, secured debt stood at Rs 2,035.44 crore, unsecured debt was around Rs 353.91 crore and current portion of long term debt was Rs 178 crore. "The entire debt is scattered between Arcil which has close to 75% of the entire debt of the company and a clutch of banks," sources said.

As per a government of India notification all fertiliser plants have to be converted to gas-based units. "The conversion cost could be in the region of Rs 300 to Rs 400 crore," said an official source.

Spic has four business lines, viz., the fertiliser division, the pharmaceuticals division which manufactures Penicillin-G Potassium (fermentation-based), active pharmaceutical ingredients, the engineering/construction services division offers specialised and turnkey project-based solutions mainly in fertilisers and the agri-business division, which offers products for agricultural development like hybrid seeds, bio-fertilisers.

Besides, the company has a strategic stake/or has promoted companies like Tuticorin Alkali Chemicals, a soda ash manufacturer, Tamil Nadu Petroproducts a company which produces liner alkali benzene, Manali Petrochemicals, Indo Jordan Chemicals and a host of other companies.

As per regulatory filings, the promoters (including TN government's investment arm which has 8.2% stake) hold 39.2%, institutions hold 16.2%, public shareholding is 29% and custodians of GDRs hold the balance. First, Spic knocked the BIFR doors, and then entered the CDR Cell for restructuring loans. The problem for Spic started in the late 1990s when the company had planned a foray into petrochemicals through Spic Petrochemicals, which ran into a rough weather. It was contrived then to make purified terephthalic acid (PTA) and polyester filament yarn (PFY) facility at Manali in Chennai.

SPIC to be reopened, says Azhagiri - 4th August 2009

Union Minister for chemicals and fertilisers M K Azhagiri said steps would be taken to ensure that the fertiliser company Southern Petrochemical Industries Ltd’s (SPIC) plant in Tuticorin that had shut production will be reopened within a month.

External links

• Company website, with some financial performance details
• ONGC examining acquiring SPIC
• Article from Times of India
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