SPIC Announces ₹970 Crore Expansion Plan Featuring Green Ammonia Unit

Southern Petrochemical Industries Corporation Ltd (SPIC), a key player in the manufacture and sale of urea, is set to embark on a significant capital expenditure program worth ₹970 crore. This initiative aims to enhance urea production capacity and establish a state-of-the-art green ammonia plant.

The expansion plan includes a comprehensive revamp of SPIC’s existing urea plant to increase its capacity and the construction of a 150-tonnes-per-day green ammonia facility. The urea plant upgrade is designed to stabilize operations and enhance efficiency.

“This expansion reflects our commitment to bolstering production capacity, diversifying operations, and driving sustainable growth,” stated Ashwin Muthiah, Chairman of SPIC and Founder Chairman of AM International, in an interview with Businessline.

The revamp and capex initiative will elevate SPIC’s urea production capacity from 7.59 lakh tonnes to 9.12 lakh tonnes annually.

“We have almost stopped buying naphtha as we now have a sustainable supply of natural gas. Transitioning from naphtha to natural gas has improved plant efficiency. We’ve reorganized our company, strengthened our balance sheet, completed the gas conversion, and maximized capacity,” Muthiah explained.

SPIC has fully transitioned to gas-based manufacturing and has been included in the gas pool mechanism effective from May 1, 2024.

Muthiah noted that SPIC has sufficient working capital and will consider raising additional funds in the future. “We are now a dividend-paying company. We issue dividends prudently while retaining funds for growth,” he added.

In FY24, SPIC reported a decline in net profit to ₹88 crore from ₹288 crore in FY23, with total income dropping to ₹1,962 crore from ₹2,849 crore. Muthiah attributed this decrease to severe rains and floods in Thoothukudi, which led to a 77-day factory shutdown in the December 2023 quarter, significantly impacting operations. Consequently, the company posted a net loss of ₹29 crore in the March 2024 quarter, compared to a net profit of ₹24 crore in the same period the previous year. The board has recommended a dividend of ₹1.50 per equity share of ₹10 each.

Looking ahead, SPIC anticipates sustained growth in revenue and profits, driven by capacity expansion, full conversion to gas-based operations, and a favorable market outlook.

HBL