Southern Petrochemical Industries Corporation Ltd (SPIC), which completed a Rs 3,300-crore debt restructure last year, will have to regain its credibility with banks and suppliers to secure working capital, according to its Chairman Ashwin C. Muthiah.
Addressing shareholders at SPIC’s annual general meeting, he said the urea manufacturer “will continue to be stressed” over the next 12-18 months as working capital is the next major challenge it faces.
Last August, the Madras High Court approved debt restructure saw the company’s Rs 3,300 crore debt cut by half. This was a significant gain in terms of shareholder value. With the ‘creditor challenge’ addressed, the next task is to secure working capital – about Rs 1,000 crore, Muthiah said following the AGM – for urea production.
Another major concern is the need to shift feedstock to natural gas ahead of the March 2014 deadline set by the Union Government for fertiliser plants based on naphtha and fuel oil.
Both working capital and shift to natural gas will be essential for SPIC to achieve ‘sustainable profits,’ he said.
balaji.ar@thehindu.co.in