Spic to restart operations as board is recast

Southern Petrochemical Industries Corporation (Spic) has recast its board of directors by inducting Neeta Mukerji as a nominee director of the Asset Reconstruction Company (India) Ltd (Arcil). This paves way for the ailing company?s management to restart production at its Tuticorin fertiliser complex.

Arcil holds close to 13% stake in Spic after it converted Rs 30 crore of Spic?s bad debt into equity as part of a corporate debt restructuring (CDR) package. Spic stock closed on NSE on Friday at Rs 23.25, up by 5.20%.

Sources said the beleaguered fertiliser company had rejigged its board of directors recently by inducting the Arcil nominee on board. The restructured board of directors would have eight members including the Arcil nominee, they added.

Minister of State for Chemicals and Fertilisers Srikant Kumar Jena told the Lok Sabha in a written reply that the company chairman AC Muthiah had intimated the ministry that Spic would restart urea production at its Tuticorin plant very soon.?The chairman, Spic has now intimated that the company has signed a memorandum of understanding (MoU) between SPIC and Indian Oil Corporation (IOC) to resume supply of naphtha and furnace oil. SPIC urea plant is getting ready to start production soon,? Muthiah has said in its letter to the ministry.

IOC had stopped supplying feedstock to Spic since the cash-strapped company was not able to pay the arrears .

Spic was forced to shut both its ammonia and urea plants way back in 2006 as its lenders refused to open fresh letters of credit to meet its working capital requirements, after two of its bankers ? Tamilnad Mercantile Bank and Punjab National Bank approached the Debt Recovery Tribunal (DRT), Chennai, for recovering dues from the company. Spic has a secured debt to the tune of Rs 4,101.17 crore and another Rs 4,81.44 crore in unsecured loans on its balance sheet. Spic is implementing a CDR package sanctioned by Arcil. The package states the main promoters ? the MA Chidambaram Group? would invest an additional Rs 150 crore in the company?s equity.