The Hindu Business Line : SPIC may exit Jordan venture

AFTER nearly a decade of having set up the joint venture company, Indo-Jordan Chemicals Company, SPIC now wants to exit the venture. It has appointed Rabo Bank for studying the move.

The logic behind the move, as outlined by a very senior official of the group, is that the joint venture is profitable now, and, hence, is a good time to cash in on it.

SPIC expects to get between Rs 400 crore and Rs 500 crore by selling its 52.5 per cent stake in Indo-Jordan Chemicals, which mines rock phosphate and produces phosphoric acid out of it.

This money would come in handy for SPIC, whose chief problem is the interest burden arising out of high-cost debt. Last year, SPIC's interest burden increased Rs 34 crore to Rs 214 crore.

In the first nine months of the current year, the interest burden was Rs 160 crore. Although marginally lower than in the same period of last year, it had a telling effect on the company's bottom line for the period - a net loss of Rs 96.77 crore.

SPIC, which is also negotiating with banks and financial institutions for a debt-restructure, feels that a cash inflow would help it turnaround.

Indo-Jordan Chemicals Company is now in its fourth year of operations. The company is a joint venture of SPIC, Jordan Phosphate Mines Company of Jordan and TAIC of Saudi Arabia. The company's plant was set up at a cost of $170 million.

Meanwhile, SPIC is looking to buy a formulations unit, and has a few companies under consideration for takeover. After taking over the formulations unit, SPIC proposes to demerge its (now profitable) pharma division (which produces Pencillin-G) and merge it with the acquired formulations unit, a senior official of the group said.

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