ONGC to get valuation report on SPIC Petro shortly

02-Feb-06

Oil and Natural Gas Corporation (ONGC) is expecting the due diligence and valuation report on its proposed plan to acquire a stake in SPIC Petrochemicals by financial advisor Ernst & Young. The company will review the suggestions made by and further them to the company's board for approval E&Y is the lead advisor for ONGC. Engineers India Ltd (EIL) and law firm Amarchand & Mangaldas have been appointed as technical and legal consultants respectively for conducting due diligence. Indications are that the financial advisors are also doing valuation of the project SPIC Petrochemicals was to put up a purified terephthalic acid (PTA) plant and a polyester filament yarn (PFY) project at Manali near Chennai. The SPIC Petrochemicals project has been delayed due to the dispute between SPIC and the Chennai Petroleum Corporation Ltd (CPCL). At that stage, the PFY plant was more than 75% complete, or about 12 months from commencing production. The PTA plant had progressed 11%, or about two years away from production. Though both the sides have resolved the dispute through an out-of-court settlement, SPIC, a sick company itself, was unable to revive the project on its own and has been looking for a new joint venture partner. ONGC has taken the initiative to revive the project.