SPIC to hasten process of hive-offs

By Our Special Correspondent

CHENNAI, JUNE 14. Weighed down by heavy interest outgo on account of the stalled SPIC Petrochemcials (SPC) project and delay in commissioning the ammonia/urea project at Jebel Ali Free Zone near Dubai, the Rs. 2712-crore Southern Petrochemcials and Industries Corporation (SPIC) has decided to hasten the process of spinning some plants off into separate ventures even while activising some investments which have become somewhat dormant.

Addressing a press conference here today, the SPIC Chairman, Mr. A.C. Muthiah, said, ``We have begun a series of exercises to hive off some plants and are also getting ready to activise some of the investments we have made.'' Once these were done, he hoped ``we will be on a better wicket.''

Mr. Muthiah said the company had already obtained the approval of shareholders for spinning off the pharmaceuticals division into a separate venture. The financial institutions' approval was awaited, he said. The Rs. 13-crore turnover bio-technology division was also sought to be hived off.

The financial institutions had already given their consent for the same, the Chairman said. He indicated that SPIC would look for some partner who could add value to the bio-technology division.

It was also contemplating to hive off the heavy chemicals division. The division was supposed to be merged with Tamilnadu Petroproducts Ltd. The anticipated merger never took place during 1999-2000, forcing TPL to fork out more tax, having run out of tax shields.

On the jinxed SPC, Mr. Muthiah clarified that Reliance had offered to buy only the equipment. ``Reliance has not really made any offer to join the project. No serious discussions have taken place. We have put in a lot of money. There is no point in selling just the equipment,'' he said.

To a question, he said he would not mind selling it if anyone came forward. Nevertheless, he hoped the issue would be resolved soon now that SPIC had answered the questions raised by the Planning Commission.

On the Jebel Ali project, Mr. Muthiah said SPIC had already signed a memorandum of understanding with a gas supplier. The deal would ensure that the project got 45 million cft of gas. This arrangement would stay until the proposed gas pipeline between Abu Dhabi and Jabel Ali became a reality. The authorities, he said, had already assured the project of Abu Dhabi gas once the pipeline was through. He said the company had spent $60 million on the project. Nearly 80 per cent of the construction work at the site had been completed, he claimed. He hoped the project would see mechanical completion by 2001.

Sales up but profit down

SPIC has reported a 12 per cent increase in sales and income from operations to Rs. 2,667.76 crores in the year ended March 31, 2000 from Rs. 2,381.46 crores in the previous year. The gross profit before depreciation and interest charges has risen marginally to Rs. 265.21 crores from Rs. 263.08 crores. The net profit has declined to Rs. 28.37 crores from Rs. 50.84 crores because of higher interest and depreciation charges.

The equity dividend has been reduced to 12 per cent from 25 per cent in the previous year.

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