May 22, 2024 [The Hindu Businessline]- Southern Petrochemical Industries Corporation Ltd (SPIC), engaged in the manufacture and sale of urea, is embarking on a capex programme involving a sum of ₹970 crore to boost urea capacity and establish a green ammonia plant.
The expansion plan includes the revamp of SPIC’s existing urea plant to augment capacity and establish a 150-tonnes-per-day-green-ammonia plant. The urea plant revamp is executed to enable the stability of the plant and improve efficiency.
“This expansion reflects our commitment to bolstering production capacity, diversifying operations and driving sustainable growth,” Ashwin Muthiah, Chairman – SPIC & Founder Chairman, AM International, told businessline.
The urea revamp and capex plan will enhance urea production capacity to 9.12 lakh tonnes from 6.24 lakh tonnes.
“We have almost stopped buying naphtha as we have now a sustainable supply of natural gas. Post-transition from naphtha to natural gas as a raw material source, the efficiency of the plant has improved. Overall, we have been able to reorganise our company. In this process, we have achieved many things – strengthening of our balance sheet, gas conversion, and ramp up of capacity to the maximum,” said Muthiah.
SPIC has fully moved to gas-based manufacturing, and it has been included in the gas pool mechanism with effect from May 1, 2024.
Muthiah outlined that SPIC has adequate working capital and would decide on raising funds later. “We are now a dividend-paying company. We are giving dividends in a measured way so that we also retain some money in the company to grow,” he added.
Profit falls
In FY24, SPIC posted a decline in net profit to ₹88 crore when compared with ₹288 crore in FY23. Total income also reduced to ₹1,962 crore from ₹2,849 crore.
Muthiah attributed a drop in revenue and profit to heavy rains and floods in Thoothukudi. Operations were severely impacted on account of floods; as a result its factory was shut down for 77 days in the December 2023 quarter, which led to reduced turnover and net loss in the quarter. The company reported a net loss of ₹29 crore in the March 2024 quarter, as against a net profit of ₹24 crore. The board recommended a dividend of ₹1.50 per equity share of ₹10 each.
Going forward, the company expects to sustain growth in topline and bottomline, supported by capacity expansion and conversion to 100 per cent gas-based operations and favourable market outlook.
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