Market Prospects in Favour of Southern Petrochemicals, Resumes Production at Tuticorin Units

India’s leading agriculture nutrients and fertilizer firm, Southern Petrochemical Industries Corporation (SPIC) has announced resumption of operations at its Tuticorin plants in Tamil Nadu.

The company disclosed in an exchange filing on Monday that its plants at Tuticorin have been restarted and production activities were resumed at 1430 hours on 6^th March 2021 after completing all maintenance related work.

Southern Petrochemical Industries Corporation Ltd. (SPIC) had shut down the plants w.e.f. January 31, 2021 for regular maintenance, activities to ramp up performance efficiencies and statutory compliance tasks.

With strong growth reported in the Indian agricultural sector, SPIC and other agri-related companies are sensing promising results in the upcoming months. In February 2021, Honourable Prime Minister Narendra Modi inaugurated the Ramanathapuram – Thoothukudi section of Ennore-Thiruvallur-Bengaluru-Puducherry-Nagapattinam-Madurai-Tuticorin Natural Gas pipeline (ETBPNMTPL), which stretches across 143 km. With the pipeline commissioning, the company is eyeing on procuring the raw materials for fertilizer production at cheaper rates.

As per our market sources, the pipeline shall source the gas from the ONGC gas fields and will dedicatedly deliver indigenous Natural Gas as feedstock to Southern Petrochemical Industries at Tuticorin and other industrial or commercial buyers and common gas distribution channels.The pipeline assures ample feedstock availability to the fertilizer giant with no complex storage requirements.

Southern Petrochemical Industries Corporation is a pioneering fertilizer producing company located at the city of Thoothukudi in Tamil Nadu. On consolidated basis, SPIC's net quarterly profit slipped by 12% to INR 63.9 million with a 12.4% gain in net sales to clock INR 4245 million in Q3 2021 over Q3 2020. In Tuticorin, the company holds a single stream Urea unit, with a rated capacity of 620.4 KTPA which uses Ammonia and Carbon Dioxide as the key raw materials. Natural Gas, Naphtha and fuel oil are the key upstream materials required in the manufacturing process.

As per ChemAnalyst, ”The market prospects seem to be in favour of Southern Petrochemicals. SPIC has a strong market presence and with the government’s strong focus on indigenous fertilizer production, it is likely to report strong numbers in FY22. 

The news of pipeline commissioning would serve as a springboard for the company to cut its fertilizer production cost by about INR 700 to INR 950 million annually. Cheaper raw material pricing is likely to aid the company in ramping up production as well.”