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| Hope for Spic's Tuticorin plant |
| BS Reporters / Chennai/ New Delhi Jan 28, 2010, 00:02 IST |
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With the India Oil Corporation (IOC) expressing keenness to supply naphtha again, chances of debt-ridden Southern Petrochemical Industries Corporation (Spic) resuming operations of its fertiliser plant have increased.
The state-run oil major had stopped supplying naphtha to Spic’s fertiliser plant at Tuticorin after the latter failed to clear its dues of around Rs 370 crore. This resulted in the closure of the Tuticorin plant in 2007.
“We have been approached by the fertiliser ministry and Spic to resume naphtha supplies. It has not been finalised. We are discussing the issue and IOC would definitely like to resume supplies since this would also help us arrive at an arrangement to recover the dues,” G C Daga, director — marketing, IOC, told Business Standard.
SPIC, meanwhile, has started raising money by selling its properties and converting its debt and equity. Sources said the company would require around Rs 500 crore working capital to restart operations.
Asset Reconstruction Company (Arcil) is also actively working on clearing the debts by selling Spic’s 15 properties, some of which have already been sold. Arcil is reported to have acquired over 82 per cent of secured debts from 18 out of the 35 secured lenders, they said.
SPIC informed BSE on Monday that Arcil would also convert Rs 30 crore debt into equity.
The AC Muthaiah-led Spic group, was South India's prominent industrial house with businesses spanning from fertilisers, chemicals to petrochemicals, logistics, went into trouble due to a financial crunch.
It owes its creditors — a consortium of banks led by Indian Bank — around Rs 2,845 crore. However, lenders such as IDBI Bank, ICICI and Bank of India have sold their Spic loans to Arcil.
The group company Tuticorin Alkali Chemicals & Fertilisers had also stopped production as Spic could not supply CO2 ammonia to it. Even the functioning of establishments such as the heavy water plant under the Department of Atomic Energy situated here was completely hit for the same reason.
Spic has also been involved in a number legal cases since 1997 and could not import phosphoric acid from its Indo-Jordan joint venture as it owed money to the latter. The company has a 51 per cent stake in the JV. Other suppliers from African countries also stopped supplying phosphoric acid as Spic could not honour commitments, according to sources.
For the year ended March 31, 2009, the company reported a net loss of Rs 707 crore on net sales of Rs 377.79 crore, as compared with Rs 567 crore and Rs 1,477.50 crore respectively in 2006-08.
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