The Hindu Business Line : SPIC Petro acquisition by ONGC soon: Muthiah

Despite indications to the contrary, SPIC Ltd is hopeful that the acquisition of SPIC Petrochemicals, a subsidiary of SPIC Ltd, by ONGC is likely to be completed soon. Mr A.C. Muthiah, Chairman, SPIC, said here on Wednesday "We are hopeful that the entire procedure would be completed in a month's time."

Speaking to Business Line, Mr Muthiah, who is here as part of a FICCI delegation visiting China, said that due diligence had already been completed by the consultants appointed by ONGC. Brushing aside reports that ONGC was unlikely to acquire a stake in SPIC Petrochemicals, he said, "We have not heard any such thing."

No comment: Raha

When contacted by Business Line, the ONGC Chairman, Mr Subir Raha, declined to comment. However, indications are that the company was likely to firm up its view on the issue soon.

Following an advice from the Petroleum Ministry, ONGC had taken interest in the project. Ernst & Young was appointed 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.

The consultants submitted their reports in February-March this year.

PTA, PFY plans

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 ran into problems when SPIC entered into a legal tussle with Chennai Petrochemicals Corporation Ltd.

When the Madras High Court passed an injunction in October 1997, funds worth Rs 946 crore were locked up in the project. Of this, SPIC's contribution was Rs 252 crore. The remaining Rs 694 crore were brought in by lenders.

At that stage, the PFY plant was more than 80 per cent complete, or about 12 months from going on stream. The PTA plant had progressed to the extent of 11 per cent and was nearly two years away from completion.