India: SPIC could sell its phosphate business

Southern Petrochemicals Industries Corporation Limited (SPIC) could soon enter into an agreement with Greenstar Fertilizers to sell its phosphate business, which includes sulphuric acid, phosphoric acid, DAP, NPK, SSP and aluminium fluoride, for an undisclosed amount. The operations are based at Tuticorin and while the cost of the purchase has not been disclosed, some anticipate that the company will raise at least Rs 3 billion from the sale. Spic is one of South India’s prominent industrial houses, with interests in fertilizers, chemicals and petrochemicals.

Greenstar Fertilizers was incorporated in August 2010 to distribute imported fertilizers and micronutrients, in addition to entering into fertilizer production and the production of associated products. It is understood that the SPIC group company, Sicagen India, earlier invested Rs 500 million in Greenstar Fertilizers for 11% non-convertible redeemable cumulative preference shares worth Rs 100 each.

The sale of its phosphate business is intended not only to reduce SPIC’s large debts but also to allow the company to keep operating and raise production rates at its urea plant in Tuticorin. The plant was restarted in September 2010 after being closed for more than three years. SPIC was previously a market leader in southern urea markets and wants to ensure that it maintains its presence in the urea market. In 2010 the Jordanian JPMC acquired the majority of the company shares. Now SPIC is planning to convert its urea plant at Tuticorin, Tamil Nadu, to run on gas from naptha.

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