ICICI Bank serves notice on Spic to recover dues

The bank has also appointed Industrial and Technical Consultancy Organisation of Tamil Nandu as the agent to manage the seized assets of the defaulting companies.

Besides ICICI Bank, Spic owes another Rs 850 crore to other banks and institutions including IDBI, State Bank of India, Dena Bank, Indian Bank and Central Bank. The company has not paid its lenders for the past several years.

Spic had originally entered into a Memorandum of Understanding in 1989 with Madras Refineries Ltd (MRL), a public sector undertaking, to set up a naphtha-based aromatic complex for manufacture of Para-Xylene and PTA. The joint venture named Arochem Ltd faced difficulties from the beginning due to delays in obtaining necessary approvals by MRL.

Owing to the delays, Spic decided to go on its own and floated Spic Petrochemicals. With MRL contesting the move in courts, the project work which started in 1994 came to a complete halt in 1997.

In order to bring the dispute to an early end, Spic and MRL worked towards an amicable settlement which culminated in a memorandum of settlement (MoS) between the both in August 1998. Under the MoS, MRL agreed to withdraw from the project on receiving a compensation of Rs 40 crore from Spic. MRL also agreed to withdraw legal proceedings on receipt of the payment. However, Spic has not made the payments to MRL for close to two years now which has led to inordinate delays in the commencement of project work.

With no positive response from Spic, lenders have been forced to take legal action against Spic Petrochemicals Ltd. Spic was promoted in the joint sector by Tamil Nadu Industrial Development Corporation Ltd and MA Chidambaram group in 1969 for the manufacture of fertilisers.