Mrl-Manali Spat Solution In Sight

Manali Petrochemicals Ltd, a Spic group company, and Madras Refineries Ltd (MRL) are likely to arrive at a settlement in the Rs 12.83 crore dispute involving the supply of propylene.

Announcing this, A C Muthiah, chairman, Manali Petrochemicals, said that MRL had agreed to reduce the prices of propylene from the Rs 22,000-Rs 24,000 per tonne band to Rs 15,000. This will be further scaled down to Rs 14,000.

"After enticing us to set up manufacturing facilities which will consume propylene, MRL kept on increasing prices disregarding our agreement with them," Muthaih said at the annual general meeting of the company. "While other companies are charging only Rs 13,000 per tonne, why should MRL charge Rs 23,000?" he quipped.

 

The disputed amount of Rs 12.83 crore, including a price variation of Rs 9.92 crore and interest of Rs 2.10 crore, will be treated as loans and advances in the books of Manali Petro. The claim was initially allowed by an arbitration award and was confirmed by the single judge of the Madras High Court. This was later set aside by the division bench of the High court and a fresh arbitration was called for. The case is now pending before the Supreme Court.

Manali Petro had reported a loss of Rs 7.79 crore last year as against a profit of Rs 3.86 crore reported for 1996-97. Muthiah blamed the losses on rising raw material costs and falling end product prices. He said, "on the one hand MRL was increasing domestic prices of propylene, and on the other hand we were unable to import as the Chennai port authorities refused to allow propylene to be landed. The cost of imports was about Rs 15,000 per tonne." The company has recorded a turnover of Rs 23.34 crore for the first quarter of the present fiscal as against Rs 20.01 crore for the same period last year.

Muthiah was, however, non-committal on shareholders questions regarding the possibility of merging Manali Petro with other group companies including Spic, Tamil Nadu Petroproducts or Spic Organics.