Spic in joint venture talks with Mitsubishi Chemicals

Suresh Nair

Mumbai, Oct 14: SPIC Petrochemicals Ltd, which is implementing a three lakh tonne PTA and 80,000 tonne per annum PFY project, is in talks with Mitsubishi Chemicals for a strategic joint venture.

PCI Xylenes and Polyester Ltd (PCI) has been engaged by Spic as consultants to help identify a joint venture partner for completing the project. ICICI will also help Spic find an appropriate joint venture partner, though details on the extent of participation could not be got.

The proposed joint venture is a fallout of the huge cost overruns of almost Rs 1,000 crore in the project after the exit of Chennai Petroleum. According to sources, the cost overrun will be partly financed by the equity brought in by the strategic partner, while the remaining will be financed through loans from financial institutions. Mitsubishi Chemicals officials were, however, not available for comments.

PCI has opined in its report that the project is well located and timed and has recommended that the project be implemented as quickly as possible. PCI will enter into discussions with the short-listed potential strategic partners, sources said, adding that IPCL is another company which will be approached.

SPIC Petro’s project has been hit by time overruns due to litigations which has also translated in to a massive cost overrun. Also, the company has changed the configurations of its plants to increase the capacity. The plant was earlier envisaged to manufacture 2.5 lakh tonne per annum of PTA and 65,000 tonnes of PFY. However, the company later decided to increase the installed capacity to three lakh tonne of PTA and 80,000 tonnes of PFY.

While the cost of the project was earlier envisaged to be Rs 2,125 crore, the revised project cost now stands at Rs 3,230 crore. The company has also initiated discussions with financial institutions and banks for resolving financial issues through restructuring of all loans, grant of relief concessions and for sanctioning further financial assistance.