Trouble-hit Southern Petrochemicals Industries Corporation (SPIC) has finally quit Indo-Jordan Chemicals Company (IJCC), its joint venture with Jordan Phosphate Mines Company.
A majority partner in the venture, SPIC has sold its entire 52.17 per cent stake in the joint venture for a consideration of $50.6 million. A. C. Muthiah-led SPIC had invested around Rs. 138 crore in the joint venture.
SPIC buys finished product, phosphoric acid, from IJCC. Jordan Phosphate Mines Company (JPMC), among the largest producers of high quality rock phosphate in the world, holds 34.8 per cent stake. It also supplies raw material for the project. The balance is held by TAIC, a joint stock company owned by 15 Arab States. Conceived at a cost of $170 million, the joint venture project went commercial way back in 1997.
Now that it had sold its stake, the management is confident that SPIC would move forward. A. C. Muthiah, Chairman, told The Hindu that “SPIC will now grow and emerge stronger financially.” Mr. Muthiah said the stake sale was in line with the scheme approved under the CDR (corporate debt restructuring) programme. ``We have done some asset sales,'' he said. The debt would come down drastically with one or two more actions. He said the term sheet of the CDR scheme had clearly laid out the guidelines on the usage of funds thus raised.
The IJCC plant produces 700 tonnes a day of phosphoric acid and 2,000 tonnes a day of sulphuric acid. The company also has a storage terminal at the Red Sea Port of Aqaba in Jordan. The sale comes even as the Asset Reconstruction Company of India (ARCIL), the country's debt aggregator of beleaguered assets, has gone in for a clean-up of the finances at SPIC and gone for the auctioning of a number of properties of the company to raise funds. SPIC owes its creditors around Rs. 2,900 crore.
A debt-ridden SPIC first went to the BIFR (Board for Industrial and Financial Reconstruction). Subsequently, it sought to revamp its corporate debt. These were necessitated after its attempt to make petrochemical products proved futile. Following this, ARCIL stepped in and syndicated the company's debts. SPIC came into being in a controlled era. Among the earliest industries to come up, SPIC once was considered a jewel in the crown of Tamil Nadu. PIC's trouble started when it moved to set up in the late 1990s SPC (Spic Petrochemicals) to make purified terephthalic acid (PTA) and polyester filament yarn (PFY). The venture ran into controversy from the beginning and dragged SPIC into huge debt.
Mr. Muthiah is confident of putting SPIC back on track.
