ONGC unlikely to acquire stake in SPIC after valuation

18-Apr-06

As per advice from the Union Petroleum And Natural Gas Ministry, ONGC has completed due diligence and valuation exercises on SPIC Petrochemicals. ONGC had appointed Ernst & Young as the lead advisor for the proposed acquisition. Engineers India Ltd (EIL) and Amarchand & Mangaldas, a law firm, were appointed as technical and legal consultants respectively for conducting due diligence. However, after carrying out the due diligence exercise, ONGC has not found value in the projects and hence plans of acquisition seem unlikely. Promoted by the SPIC group, SPIC Petrochemicals had planned to set up a purified terephthalic acid (PTA) and polyester filament yarn (PFY) facility at Manali in Chennai. However, the project was stalled in the late 90s when SPIC entered into a legal wrangle with Chennai Petrochemicals Corporation Ltd (CPCL). When the Madras High Court passed an injunction in October 1997, funds worth Rs 946 crore were locked up in the project- Rs 252 crore from SPIC and Rs 694 crore from lenders. At that stage, the PFY plant was more than 75% completed and the PTA plant was 11% completed.