The share price of Manali Petrochemicals Ltd (of face value of Rs 5) on Wednesday rose on the NSE by 8.30 per cent to Rs 13.05 on the announcement that the promoter-company, SPIC, has sold a bulk of its holdings to the promoter-family.

Mr A.C. Muthiah, Chairman, Southern Petrochemical Industries Corporation (SPIC), on Wednesday bought 5,000 shares, while a company promoted by the family, SIDD Life Sciences Pvt Ltd, bought 5.5 crore shares.

Mr Muthiah and SIDD Life Sciences hold 31.97 per cent in Manali Petrochemicals, which manufactures polyurethane foam. Prior to the transaction, SPIC held 38.29 per cent in the company.

Manali Petro is today the only profit-making company in the SPIC group. (The other companies in the group are Tamilnadu Petroproducts, Tuticorin Alkali Chemicals and Fertilisers and SPIC Electric Power Ltd). In 2009-10, Manali Petro achieved a turnover of Rs 388 crore and made a net profit of Rs 21 crore. It also paid a dividend of Rs 0.375 a share (7.5 per cent). In the first three quarters of the current year, Manali Petro achieved a turnover of Rs 323 crore and a net profit of Rs 16.76 crore.

ARCIL pressure

The sale of stake by the promoter-company to a closely-held company of the promoter family comes at a time when the promoters of SPIC are under pressure from Asset Reconstruction Company of India Ltd (ARCIL) to fetch funds for restarting the operations of SPIC, the Tuticorin-based fertiliser manufacturer.

SPIC owes its creditors Rs 2,845 crore. ARCIL, the debt aggregator, has bought over 80 per cent of the stock of debt and has a representative on SPIC's board.

SPIC has been selling its various assets to raise funds. In 2009, it auctioned off several properties — godowns and guest houses — in Chennai, Mumbai and Kodaikanal, to raise funds. It sold its stake in the joint ventures, Indo Jordan Chemicals and Technip, and has put its Pencillin-G manufacturing facility in Cuddalore on sale. Mr Muthiah himself sold a part of his personal property in Chennai to raise Rs 150 crore.

The question, therefore, is why are SPIC's promoters buying SPIC's stake in Manali Petrochemicals. Market players believe that this might be a prelude to Manali Petro itself being taken over by another company, at which stage the shares could be sold to the purchaser for a gain. None of the company officials was available for comment.

The shares of SPIC rose 4.64 per cent on the NSE to close at Rs 16.90 a share.

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