Tuticorin Alkali deliberates merger with SPIC

30-May-06

The board of Tuticorin Alkali Chemicals & Fertilisers Ltd. plans to consider a proposal for merger with Southern Petrochemicals Industries Corp. Ltd. (SPIC) at its meeting on May 30. The value of the assets at SPIC Petro's two incomplete PTA and PFY projects at Manali, near Chennai is estimated at around Rs 1,200 crore. When the project was conceived, it was to produce 2.5 lakh tons of PTA and 65,000 tons of PFY at an investment of Rs 2,125 crore. When the project was put on stay by the Madras High Court in October 1997, an amount of Rs 946 crore stood locked up. Of this, SPIC's contribution was Rs 252 crore, and the lenders had brought in Rs 694 crore (principal), against their commitment of Rs 1,347 crore. At that stage, the PFY plant was more than 75% complete, or about 12 months away from commencement of production. The PTA plant had progressed about 11%, or about two years from completion. Earlier, ONGC was to acquire SPIC, and on 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. ONGC's deal was to acquire SPIC Petro, a 100% subsidiary of Southern Petrochemicals Industries Corporation (SPIC), for around Rs 1,200 crore.