The Hindu Business Line : SPIC turns sick, referred to BIFR

SOUTHERN Petrochemical Industries Corporation (SPIC) has been referred to the Board for Industrial and Financial Reconstruction (BIFR), consequent to an erosion of the company's net worth to less than 50 per cent of its highest net worth in the previous four years.

The company has called for a meeting of its shareholders to ``consider such erosion''.

In the notice to the shareholders, SPIC has said that on account of accumulated losses, there has been a ``significant reduction'' in the net worth of the company. Net worth stood at Rs 10.93 crore on March 31 as compared to the peak net worth of Rs 653 crore in 1999-2000.

The company has attributed five reasons for the erosion of net worth — its dead investments in SPIC Petro and the fertiliser project in Dubai, interest and exchange fluctuation incurred up to March 31, 2000, on the floating rate notes issued by the company for Rs 116.28 which had to be written off during 2002-03, the drought last year which resulted in poor fertiliser offtake — a problem compounded by the non-receipt of fertiliser subsidy from the Government of India in time, and the prospects of the engineering consultancy division being hampered by fund constraints.

The company has further said, ``the implementation of the CDR (corporate debt restructuring) package would bestow the company the benefit of reduction in interest costs and suitable reschedulement of loans, thereby improving the financial health of the company.''

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