ONGC embarks on due diligence of SPIC Petro

02-Dec-05

Oil and Natural Gas Corporation (ONGC) has selected Engineers India Ltd (EIL) and law firm Amarchand & Mangaldas as technical and legal consultants respectively for conducting due diligence for its proposed plan to acquire stake in SPIC Petrochemicals, the petrochemicals business of SPIC (Southern Petrochemicals Industries Corporation Ltd). A final decision of a complete buyout of SPIC's petrochemical project would be possible after the due diligence and valuation of the project. SPIC Petrochemicals is to include a purified terephthalic acid (PTA) plant and a polyester filament yarn (PFY) project at Manali near Chennai. The project was originally shelved due to the dispute between SPIC and the Chennai Petroleum Corporation Ltd (CPCL), which were later resolved through an out-of-court settlement. Almost Rs 1,000 crore locked up in the project. SPIC, a sick company, was unable to revive the project of its own and has been looking for a new joint venture partner. At that stage, the PFY plant was more than 75% complete (about 12 months from commencing production) and the PTA plant was barely 11% complete (about two years away from production).