Spic settles Arochem row with hefty compensation to MRL

CHENNAI, Oct 23: The out of court deal struck by Southern Petrochemical Industries Corporation Ltd (Spic) with Madras Refineries Ltd (MRL...

CHENNAI, Oct 23: The out of court deal struck by Southern Petrochemical Industries Corporation Ltd (Spic) with Madras Refineries Ltd (MRL) in the disputed joint venture National Aromatics & Petrochemicals Corporation Ltd (Arochem) is awaiting Cabinet nod after getting cleared by the ministry of petroleum and natural gas, it is learnt.

A source said Spic has agreed to pay MRL a total of Rs 27 crore, covering MRL’s investment of Rs 13 crore in Arochem over the years and Rs 14 crore towards interest on its investments in Arochem. It is said Spic had agreed to compute interest at the prime lending rate prevailing in 1994 when Spic floated a separate company Spic Petrochemicals Co. Ltd (SPC) to manufacture purified terepthalic acid (PTA) and polyester filament yarn (PFY).

The deal also enables Spic to get control of Arochem land and 168 acres of land taken for SPIC. The source said while about 100 acres of land will be retained for the Arochem project, the balance of some 300 acres will be taken by the stategovernment for other purposes.

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MRL it is said has agreed to withdraw all court cases against Spic. After the deal gets cleared by the Union Cabinet, Spic will move for the merger of SPC and Arochem. Meanwhile, Spic is also scouting for a joint venture partner for getting aromatics technology which is generally considered difficult to get.

The product mix in the merged entity will be the same viz PFY, PTA and aromatics. Spic wants to go ahead with PFY project first as it is almost ready for commissioning and has a capacity of 80,000 tonnes per annum.

Meanwhile, V Shyam Sunder, chairman and managing director of MRL, is reportedly quitting the PSU for greener pastures. If reports are to be believed Shyam Sunder is likely to head another refinery project coming up in Tamil Nadu. Sources said that Shyam Sunder is expected to join the Nagarjuna Group of Hyderabad which is putting up the Pennar Refinery project in collaboration with Tamil Nadu Industrial Development Corporation Ltd (Tidco). The refinery is tohave a capacity to process crude of 5 million tonnes per annum. It is only a little over a year since Shyam Sunder took over as CMD of MRL. Earlier he was the regional director of south for Indian Oil Corporation (IOC) where he had a long stint.

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