SPIC
Encyclopedia
Southern Petrochemical Industries Corporation Ltd., or SPIC, is an India
n company that makes petrochemical
s. 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.
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 twofold: 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.
Union Minister for chemicals and fertilizers M. K. Azhagiri
said steps would be taken to ensure that the SPIC's plant in Tuticorin that had shut production will be reopened within a month.
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
n company that makes petrochemical
Petrochemical
Petrochemicals are chemical products derived from petroleum. Some chemical compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable sources such as corn or sugar cane....
s. Its core competency
Core competency
A core competency is a concept in management theory originally advocated by CK Prahalad, and Gary Hamel, two business book writers. In their view a core competency is a specific factor that a business sees as being central to the way it, or its employees, works...
is its fertilizer
Fertilizer
Fertilizer is any organic or inorganic material of natural or synthetic origin that is added to a soil to supply one or more plant nutrients essential to the growth of plants. A recent assessment found that about 40 to 60% of crop yields are attributable to commercial fertilizer use...
portfolio. It also has operations in the areas of power
Electrical power industry
The electric power industry provides the production and delivery of electric energy, often known as power, or electricity, in sufficient quantities to areas that need electricity through a grid connection. The grid distributes electrical energy to customers...
, oil
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
and natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
, pharmaceuticals, and biotechnology
Biotechnology
Biotechnology is a field of applied biology that involves the use of living organisms and bioprocesses in engineering, technology, medicine and other fields requiring bioproducts. Biotechnology also utilizes these products for manufacturing purpose...
applications in agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
.
The company, headquartered in Chennai
Chennai
Chennai , formerly known as Madras or Madarasapatinam , is the capital city of the Indian state of Tamil Nadu, located on the Coromandel Coast off the Bay of Bengal. Chennai is the fourth most populous metropolitan area and the sixth most populous city in India...
, was started in 1975 as a joint venture
Joint venture
A joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets...
between the M. A. Chidambaram
M. A. Chidambaram
Muttaiya Annamalai Chidambaram was an Indian industrialist and cricket administrator. He was the youngest son of Sir Annamalai Chettiar.-Early life:...
Group and TIDCO
TIDCO
Tamil Nadu Industrial Development Corporation is a governmental agency in the state of Tamil Nadu, India. It is responsible for the development of industries in the state by formulating policies that help industry growth, and also by establishing Industrial Estates. It often partners with TANSIDCO...
(a part of the Government
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...
of Tamil Nadu
Tamil Nadu
Tamil Nadu is one of the 28 states of India. Its capital and largest city is Chennai. Tamil Nadu lies in the southernmost part of the Indian Peninsula and is bordered by the union territory of Pondicherry, and the states of Kerala, Karnataka, and Andhra Pradesh...
). The Government sold its stake in 1992. The company's biggest client has traditionally been the Government of Tamil Nadu, which purchases agro-products
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
for subsidized distribution through its Public Distribution System
Public Distribution System
Public Distribution System is an Indian food security system. Established by the Government of India under Ministry of Consumer Affairs, Food, and Public Distribution and managed jointly with state governments in India, it distributes subsidised food and non-food items to India's poor...
. The company has been in poor financial health since about 2002. Its 2006 sales amounted to INR
Indian rupee
The Indian rupee is the official currency of the Republic of India. The issuance of the currency is controlled by the Reserve Bank of India....
22 billion
1000000000 (number)
1,000,000,000 is the natural number following 999,999,999 and preceding 1,000,000,001.In scientific notation, it is written as 109....
, with a net operating loss of INR
Indian rupee
The Indian rupee is the official currency of the Republic of India. The issuance of the currency is controlled by the Reserve Bank of India....
1.8 billion.
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 twofold: 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
Terephthalic acid
Terephthalic acid is the organic compound with formula C6H42. This colourless solid is a commodity chemical, used principally as a precursor to the polyester PET, used to make clothing and plastic bottles. Several billion kilograms are produced annually...
(PTA) and polyester filament yarn (PFY) facility at Manali in Chennai.
Union Minister for chemicals and fertilizers M. K. Azhagiri
M. K. Azhagiri
Muthuvel Karunanidhi Azhagiri , generally known as M. K. Alagiri, is an Indian politician and a Cabinet Minister. He is the second son of the head of Dravida Munnetra Kazagham, M. Karunanidhi. His mother, Mrs. Dayaalu Ammal, is the second wife of M. Karunanidhi...
said steps would be taken to ensure that the SPIC's plant in Tuticorin that had shut production will be reopened within a month.