In the 1980s and ?90s, when south-based industries were stagnant and risk-averse, and southern businessman seen as arch conservative, one name always stood out. AC Muthiah, promoter of the joint sector fertiliser giant Spic (Southern Petrochemicals Corporation) was willing to tread a different path. One could not have predicted even in the mid-90s that one day the Asset Reconstruction Company of India (Arcil) would be selling off several of Spic?s properties in an attempt to revive the company, whose downward spiral began around 2000. Its turnover fell from R2,711 crore to R415 crore in the past ten years.

Incorporated in 1969, Spic was jointly promoted by MA Chidambaram (Muthiah?s father) and Tamil Nadu Industrial Corporation (Tidco). Tidco held 26% and the private promoter 25%, the rest with financial institutions and the public. It was the state’s first joint sector project. The only businessman in Tamil Nadu who was willing to go with the government then was Chidambaram, while well-known southern groups like TVS, Amalgamations, Murugappa, Chemplast and Kotharis stayed away. They were criticised for not taking up opportunities which were opening up.

Spic was plagued by cost overruns, problems with feed stock availability, pricing policy and shaky management. By 1977, Spic was tottering with losses of R68 crore, more than thrice its equity capital of R19 crore. At this point, S Venkitaramanan, a senior IAS officer (who retired as RBI governor) was roped in to revive Spic.

Venkitaramanan as state industry secretary was keen on Tamil Nadu getting a major fertiliser unit. During his tenure, he had tried to rope in various entrepreneurs in vain. Spic under him performed a near miracle, becoming a classic turnaround story. Among many other factors, the retention price scheme for individual fertiliser companies as recommended by the Marathe Committee came at the right time for Spic. When Venkitaramanan returned to the Centre in 1983, Muthiah who had worked closely with him took over.

By mid-80s Spic’s turnover crossed R500 crore, becoming a profitable company. It could invest in the LAB (bio-degradable raw material detergents) project of Tidco, named Tamil Nadu Petro Products. Spic managed to pip Hindustan Unilever to the post in getting this project. It also promoted Tamil Nadu Alkalines and Chemicals with Tidco to manufacture soda ash. It hoped to become a major supplier to the detergent industry.

Spic Electronics was set up to manufacture computer magnetic tapes.

Spic got into trouble yet again with the state’s changing political scenario. Its growth phase, mostly during chief minister MG Ramachandran’s era, stalled when his arch rival M Karunanidhi became chief minister in 1989. The DMK government examined Spic’s shareholding in 1990 and declared that the Chidambaram family held far less than 25%.

Although there was a dire need for Spic to raise resources through a rights issue, Tidco would not allow it to do so.

Meanwhile, Muthiah had also taken over LCV-maker Standard Motors, which was in dire straits after it launched the Standard 2000 car. He had put in his personal investment of R2 crore. But he was not allowed to bring in funds from the joint sector companies.

Opening of Standard Motors became an election issue for Jayalalithaa. Spic?s fortunes changed overnight when she swept back to power in 1991. It was allowed to put in R6 crore through Tamil Nadu Petro Products. In 1992, when Spic went in for a zero-bond issue on a rights basis for R42.50 crore, Tidco renounced its rights to participate in this. The Spic disinvestment case became an election issue for Karunanidhi. Jayalalithaa was accused of giving away Spic to Muthiah virtually free.

But that was later. During the Jayalalithaa period, Muthiah pulled off what was then seen as many stunning coups adding to his reputation of being the only daring and visionary businessman in Tamil Nadu. He promoted ventures through his joint sector companies to manufacture, among other things, detergents (collaborator Henkel of Germany), and penicillin (Spic Pharma).

The downfall came with the R1,500-crore Spic Petrochemicals to manufacture PTA and PFY? his most ambitious venture. It was supposed to be a JV between Spic and Chennai Petroleum Corporation, which got a stay order against the project when Spic decided to go solo.

Nor was Spic allowed to raise finances through a public issue. Having invested R1,000 crore on this project, its liabilities started mounting.

Other projects also started failing one after the other. Most of them belonged to the import substitution era. For example, penicillin became unviable with cheap imported penicillin from China. Spic Electronics never took off.

The fertiliser industry itself changed with the scrapping of retention price. Spic?s Tuticorin plant with naphtha as feedstock cannot compete with gas-based plants. Plant and machinery have to be modernised. Its loans (nearly R3,000 crore) are being bought and managed by Arcil, which has been selling Spic?s assets and investments. Now, all that is left is the urea and DAP units in Tuticorin. The units were shut down between 2007 and 2010. There have been attempts to revive them from last year.

Now, Arcil will be selling off the DAP plant.

It is learnt that Sidd Lifesciences, promoted by Muthiah’s son Ashwin Muthiah, an NRI based in Singapore, will be bidding for it so that the core business, the Tuticorin fertiliser plant, does not go out of the promoters’ hand.

At the same time, Arcil could raise funds to retire the huge debt portion. It is said that Muthiah?s ambition now is to get back to his roots and revive the fertiliser business.