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CHENNAI, Feb. 8

SOUTHERN Petrochemical Industries Corporation (SPIC) has confirmed that it is still interested in acquiring Mangalore Chemicals and Fertilisers Ltd (MCF), a Vijay Mallya group company.

"We are interested in buying, he (Mr Mallya) is interested in selling," a senior SPIC official told journalists on Thursday.

The Mallya group has gone on record that it intends to get out of the company by the end of this year. Last year, there were reports that the group was willing to sell its 30.44 per cent stake in MCF for Rs 60 crore — a climbdown from the earlier demand of at least Rs 100 crore.

There have been talks of two groups interested in the company — an unnamed MNC and the AV Birla group. SPIC's renewed interest in the fertiliser unit, therefore, adds one more player to the competition.

A few years ago, SPIC had been one of the top contenders for MCF but it had made clear that it would not take over the company unless the nameplate capacity was derated. This would have meant more subsidy for MCF. However, the derating never happened.

But a lot of water has flown under the bridge since then. MCF has become a debt-free company, thanks to BIFR-brokered write-offs. MCF reported a net profit of Rs 40.73 crore for the year ended March 31, 2001.

Although SPIC has evinced interest in the acquisition, the official pointed out that a decisive factor would be the fertiliser policy.

Recently, the Department of Chemicals and Fertilisers issued a notification revising downwards the retention prices of 13 urea manufacturing units with effect from April 1, 2000. This was meant to reflect the revision in consumption norms on an interim basis based on the actual levels achieved during 1999-2000 or the existing level, whichever is lower. As a consequence of this, these plants have received a demand from the Government for refund of a part of the money received as subsidy.

The industry view, according to the SPIC official, is that the companies made money out of savings in consumption, and were hence entitled to keep what they saved.

MCF is reported to have received a demand for return of Rs 58 crore. Last month, the company even wrote to the Karnataka Government, threatening to close down the unit if it was made to pay the sum.

All this as well as the contours of the fertiliser policy will weigh heavily upon any decision for acquiring MCF, the SPIC official said. He also said that if it took over MCF, it would have to invest around Rs 160 crore in further revamping the fertiliser plant.

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