INTRODUCTION:

SPIC GROUP

Profile:

The Southern Petrochemical Industries Corporation (SPIC), is a front ranking industrial

conglomerate of India. SPIC is first and foremost a fertilizer company, but it also produces
biotechnology, pharmaceuticals, industrial, heavy and fine chemicals, adhesives, detergents and
house care products. It offers services in electronics, engineering and IT through its strategic
business units, groups companies and joint ventures in India and abroad.

SPIC's annual turnover is over Rs. 2,000 crores. When SPIC was incorporated in 1969, it
was the first joint sector project ever in India. In 1975, as SPIC s Fertilizer Complex in Tuticorin
went on stream, it was as the largest naphtha based plant in Asia and largest urea plant anywhere
in the world. Today, SPIC has capacities to manufacture nitrogenous, phosphate and ammonia
fertilizers, sulphuric and phosphoric acids. The fertilizer complex also generates by-products in
the form of gypsum and aluminum fluoride (over 3,000 tonnes p.a.).

Sectors:

SPIC Engineering / Construction Services (SPIC SMO) division services the following sectors,
both in India and abroad.

- Oil and gas - Chemicals

- Petroleum refining - Fertilizers
- Offshore - Power
- Petrochemicals - Pharmaceuticals

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ABOUT THE INDUSTRY:

MPL:

Manali Petrochemical Ltd.  was  incorporated  on 11th June 1986  in Tamil Nadu  as  a
public  limited  company. It was promoted by M/s. Southern Petrochemical Industries
Corporation Limited (SPIC). The Construction began in the year 1989 and the production
commenced in July 1990. The main object of the Company is to manufacture Propylene Oxide /
Propylene Glycol (PO / PG) and Polyols used as industrial raw materials.

During the same time, M/s UB Petro Products Ltd., established jointly by TIDCO and
UB group also commenced production of the same product group in another green field site in
the Manali area itself. This company was taken over by SPIC in 1995 and was renamed as SPIC
Organics Ltd., and merged into MPL in the year 2000. Subsequent to the merger, the plants set
up by SPIC is being referred to as MPL PLANT I and the other one being referred to as MPL
PLANT II.

Plant I

The Company entered into an agreement with TECHNIP France who provided the
technology of ATO CHEM of France for the manufacture of Propylene Oxide and Propylene
Glycol and that of ARCO Chemical Co. of USA for the manufacture of Polyols.

TECHNIP provided their licensed basic engineering, manpower services and assistance
in importing plant and machinery through TECHNIP for the PO / PG projects. It also supported
license know-how and technical consultancy and manpower services for Polyol project.

Another agreement was signed with ARCO Chemical Co. of USA for providing technical
consultancy in the application and testing of polyurethane foams and for development of new
applications.

Plant II

M/s Press Industria provided the technology of Montedeppe for Propylene Oxide and
Propylene Glycol Plants and their own technology for Polyol. They had independent system-
house with the technology provided by Enichem under the name M/s Indital Chemicals which
was subsequently closed. The technology developed by R&D centre at Plant I is currently used
in Plant II also for blending.

Polyols are used along with Isocyanate (MDI or TDI depending on the application) in the
manufacture of polyurethane, which is an engineering plastic requiring considerable amount of
technical services.

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 The flexible grade Polyol that goes into production of mattresses, pillows etc. is marketed
under the brand name EMPEYOL F-3000 / F-3002.

The rigid grade is used for insulation & refrigeration applications and is marketed with
specific grades. The Company imports and markets the necessary MDI and other grades of
isocynates.

PRODUCT PORTFOLIO:
 
Manali Petrochemical Ltd. produces Propylene oxide, Propylene Glycol and Polyols,
intermediates with applications across a spectrum of industries including those of
Pharmaceuticals, Polyurethane, Resin, Fragrances, Food, Refrigeration, Oil Drilling and others.

We also manufacture other commodity and specialty products from the two facilities
based at Manali, near Chennai, in the state of Tamil Nadu in India.

Manali Petrochemical Ltd. product portfolio includes intermediates, commodity and

specialty products with a range of applications.    

Intermediates

 Propylene oxide -Intermediate in pharmaceutical formulations

 Propylene glycol-Used in pharmaceutical formulations, unsaturated polyester resins,

food flavor, fragrances .

MPL manufactures this product to IG / IP / USP / BP standards.

 Flexible and molded Polyols -Polyurethane used in automobile seats, furniture,

garments, mattresses.

 Rigid Polyols-Polyurethane for refrigeration, thermo-ware, industrial insulation.

 Elastomer grade Polyols-Used in coatings, sealants, adhesives, and oil-field surfactants.

Commodity

 Flexible Slabstock Polyol F-3000 , F-3002 , F-3502 , F-4002

 Di Propylene Glycol (DPG) For industrial uses such as brake fluid, anti-freeze, polyester
resins and carbonless paper, and in cosmetics including toilet soap, detergents, body
spray, perfumes, and incense sticks.

 Tri Propylene glycol -Polyester resins and brake fluids, pour point depressants, drilling
fluids, and surfactants.

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FUNCTIONAL LEVEL:

Manali Petrochemical Ltd. also manufactures a range of specialty, blending and ready-to-use
products.

Facilities:

MPL operates two production facilities at Manali near Chennai to manufacture

Propylene oxide (PO), Propylene Glycols (PG) and Polyols. MPL markets its Polyols with
Isocyanates imported from Japan and China and the pre-polymers produced at MPL.

MPL is currently producing 29,000 MT/PA of Propylene Oxide, 16,000 MT/PA of

Propylene Glycol and 16,000 MT/PA of Polyether Polyol and 5000 MT/PA of System Polyol.
Production of Propylene Oxide will go up to 36,000 MTs/PA after the debottle-necking
operations are completed during the current year.

 Manali Petrochemical Ltd. Plant-I (originally built by SPIC) was set up with the
technology of Atochem for manufacture of PO and PG and that of Arco for manufacture
of Polyol acquired through Technip, France.
 Manali Petrochemical Ltd. Plant-II (originally joint venture of UB Group and TIDCO)
which was merged with MPL later utilizes the technology of Enichem of Italy for the PO
and PG and Press Industrial for manufacture of Polyol.

R & D Overview :

R&D is the technical centre of MPL and have been responsible for most of our major
product breakthroughs. At MPL, we believe in continuous improvements, new process/product
development, new markets and new technology.

SYNTHESIS AND FORMULATION:

MPL has a modern "state of the art" application laboratory with pilot plant facilities and
foam producing and testing laboratory. Various grades of polyols can be synthesized and polyol
formulation can be prepared and foam tested to meet the exact requirements of the customers.

Several new products have been synthesized/formulated using the R&D facilities available at
MPL. The notable products that have been produced and commercialized are:

 Water blown polyol system for hyper low density 4-wheeler seats and furniture cushions

 Eco-friendly rigid polyol systems using new generation blowing agents

 Composite drilling fluids to be used in drilling applications

 Eco friendly Propylene Glycol Mono Methyl Ether (PGMME) solvent

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polyurethane applications in the following segments:

 Automotive

 Appliance

 Construction

 Thermo ware

 Furniture and bedding

TESTING AND ANALYSIS

MPL R&D centre is fully equipped with most modern testing and analytical equipments
which include computerised Universal Testing Machines (UTM), Thermal Conductivity
Analysers, Automatic Karl-Fischer Titrators, Flammability Tester, HPLC/GPC system, Gas
Chromatograph (GC), UV-Visible Spectrophotometer, FTIR Spectrophotometer, Digital
Viscometers, etc.

It has both bench foaming as well as commercial scale foam plants attached with the
laboratory for production of foam at various development stages before the formulation is
commercialised.

TECHNICAL SERVICE / CUSTOMER SUPPORT:

R&D department is close to our customers and rapidly and most effectively responds to
the needs of the markets served by our customers. MPL has in its possession, a young Technical
Service Group, which constantly liaise with customers to develop and fine tune newer cost
effective formulations. This group has also developed newer cost effective "PU" catalysts, which
are used in the formulations. We provide customized training, developmental support and
trouble-shooting services.

FINANCIAL PERFORMANCE
for the years 2005-06, 2006-07, 2007-08, 2008-09 & 2009-10
 
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
TURNOVER (GROSS) 37766.95 36433.52 36955.2 39479.94 41996.26
PBT 3642.03 2260.56 746.65 1046.79 3000.43
PAT 3403.8 1499.05 600.94 703.18 2106.27
DIVIDEND (%) 10% 10% 10% 5% 7.50%
(Rs. In lakhs)
100 Lakhs Rupees = 5 Million US $ (Approx)

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QUALITY & SAFETY
 
QUALITY MANAGEMENT SYSTEM AT MPL

 CERTIFYING BODY : M/s. DET NORSKE VERITAS

 STD : 9001 - 2000
 INITIAL CERTIFICATION: 18/06/1996.
 LAST RECERTIFICATION: 20/08/2008.
 RECERTIFICATION VALID UPTO : 18/06/2011

ENVIRONMENTAL MANAGEMENT SYSTEM AT MPL

 CERTIFYING BODY : M/s. DET NORSKE VERITAS

 STD : 14001 - 2004
 INITIAL CERTIFICATION: 21/08/2002.
 LAST RECERITICATION: 20/08/2008.
 RECERTIFICATION VALID UPTO : 18/06/2011

ORGANZATIONAL LEVEL

MPL life cycle is always increasing in its profit..Always it stated already in financial
performance.

SWOT ANALYSIS FOR MPL:

Manali petrochemical limited is functioning based on the petroleum by products, the following
analysis are considered for petroleum industries.The analysis applicable to the by products .

Consumption
(MMT) growth
FY01 FY02 FY03 FY04

Diesel 38 36.5 36.6 37.3

(%) -3.9% 0.3% 1.9%

change

Petrol 6.6 7 7.6 7.9

(%) 6.1% 8.6% 3.9%

change

LPG 7 7.7 8.4 9.3

(%) 10.0% 9.1% 10.7%

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Strength:

 Developing economy: Historically, demand for petroleum products has traced the economic
growth of the country. With GDP expected to grow at near 7% in the long-term, the energy
sector would benefit from the same, going forward.

To put things in perspective, diesel sales grew by nearly 12% (which constitutes 40% of the
entire petro-products basket), petrol sales by 9% and a double-digit growth in LPG (liquefied
petroleum gas) in 1QFY05. While this rate is not likely to sustain, we expect the industry to
witness a 4% growth in the entire product basket in FY05 and beyond. 

 Government decisions: The recent price increases and also the decision to allow oil
companies to increase prices within a band of 10% augurs well for the industry.

This step is likely to reduce government interference and provide some autonomy to oil
companies when it comes to increasing petrol and diesel prices in order to protect margins.
Further, the duty cuts are also likely to result in reduced under-recoveries by way of subsidies on
LPG and kerosene.

Customs duties Excise duties…

Excise old new Customs duty old (%) new (%)

duty (%) (%)
crude oil 10 10
Petrol 26 23
petrol 20 15
Diesel 11 8
diesel 20 15
Kerosene 16 12
LPG 10 5

Kerosene 10 5

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Weakness:

Crude prices: Nearly 70% of India's crude requirements are fulfilled by imports and this figure
is likely to increase going forward. Crude prices have breached the $45 barrier again and are
likely to remain at around $40 per barrel range.

As per IEA, India is one of the most inefficient countries among developing nations as far as
energy usage is concerned. Such high crude prices are likely to impact margins of oil marketing
companies. Given the political implications, retail prices may continue to lag the rise in input
cost.

Lack of freedom: Although the government has decided to provide autonomy to oil companies
to increase petrol and diesel prices within a 10% band, other products such as LPG and kerosene
continue to remain under the government controlled price mechanism.

As per the current estimates, the subsidies on LPG amount to Rs 90 per cylinder after factoring
in duty cuts and that on kerosene is over Rs 6 per litre.

While the government has managed to reduce its share in subsidies, select oil companies are
being forced to absorb the losses.

Government: Hands-off

Year Subsidies

(Rs) LPG/cylinder Kerosene/litre

2002-03 67.75 2.45

2003-04 45.17 1.63

2004-05 22.85 0.81

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Opportunities:

Equity Oil: Major oil marketing companies are now venturing into upstream exploration and
production activities so as to secure crude supply. To put things in perspective, IOC and OIL
India are likely to jointly bid for oil fields aboard. At the same time, ONGC's wholly owned
subsidiary, ONGC Videsh (OVL) has acquired stakes in over 9 countries in its quest to attain the
20 MMT (million metric tonnes) by 2020. This backward integration is an opportunity for IOC
to secure at least 25% of its crude oil requirements for the refineries.

Supply as a (%) Age of allocation

Supply

Power 52.0%

Fertilizer 65.0%

Others* 51.0%

Natural Gas: Natural gas has the potential to be the fuel of the future with demand outpacing
supply by more than two times. Such high scarcity of natural gas provides a big opportunity for
oil companies. The below mentioned table indicates the allocation to the various core sectors and
the shortage faced by them, thereby giving an idea of thpotential for growth.

Although Petronet LNG has now started importing natural gas, the future holds promise as
Reliance Industries' Krishna Godavari Basin goes into commercial production in FY06 and
Shell commences its terminal at Hazira. More exploration activities are in the pipeline and this
could reduce the country's dependence on crude in the long term.

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Threats:

Competition: Until FY04, oil-marketing companies had complete control over the downstream
marketing business while private sector players were restricted to only refining.

However, with entry of private players such as Reliance, Essar Oil and Shell (in the
waiting), the sector is likely to witness increased competition going forward. The oil PSUs had
hitherto developed a fortnightly pricing mechanism, which is likely to discontinue.

The price of petrol and diesel is artificially kept high so as to cross-subsidize LPG and
kerosene. Since private players will not be bound to provide for these subsidies, PSU marketing
players are likely to suffer from lower throughput per outlet.

Continuing government interference: During the first six months of the current fiscal year, the
oil marketing companies were refrained from increasing product prices due to political reasons.

This affected margins of downstream players. Going forward, if the government

interference continues, oil-marketing companies will be at a disadvantage.

Although we believe the industry is likely to witness increased competition, the initial retail rush
by private sector players has slowed down. PSU marketing companies have already stepped up
their expansion plans and to that extent, have created significant entry barriers for private
players.

Although throughput per outlet (sales per outlet) is likely to decline in the future, we
believe that any substantial entry of the private players would indirectly benefit the PSUs, as the
government's pricing policy will not hold much water and the market forces would determine
pricing

GLOBAL LEVEL STRATEGY:

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Merger and Acquisitions:

The Company entered into an agreement with TECHNIP France who provided the
technology of ATO CHEM of France for the manufacture of Propylene Oxide and Propylene
Glycol and that of ARCO Chemical Co. of USA for the manufacture of Polyols.

TECHNIP provided their licensed basic engineering, manpower services and assistance
in importing plant and machinery through TECHNIP for the PO / PG projects. It also
supported license know-how and technical consultancy and manpower services for Polyol
project.

Another agreement was signed with ARCO Chemical Co. of USA for providing
technical consultancy in the application and testing of polyurethane foams and for development
of new applications.

In 2000, SPIC Organics Ltd. (SORL) was merged with Manali Petrochemical Ltd. to
became a single entity called Manali Petrochemical Ltd.

SPIC s partners in different sectors include the Technip Group of France (Technip India
Ltd.); the Jordan Phosphate Mines Company Ltd., Jordan, and the Arab Investment Company
(Indo Jordan Chemicals Company Ltd.); Jurong Engineering Ltd.(SPIC JEL Engineering
Construction Ltd.) and the Emirates Trading Agency, Dubai (SPIC Fertilizers and Chemicals
FZE).

Association with Indian Polyurethane Association

MPL is Founder Memeber of INDIAN POLYURETHANE ASSOCIATION and played a

key role in formation and functioning of the Association which conducts PU Tech India
Exhibitions and Conference on PU Industries once in 3 years.

  Indian Polyurethane Association is a non-profit organization founded on 9th May 1992 to

further the interest of POLYURETHANES in INDIA. The Association promotes the PU-
Industry through various interactive events and programes in India and Abroad.

CORPORATE LEVEL

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Corporate governance

SPIC Limited is conscious that a business run on principles of fairness, transparency and
accountability aids in fostering a healthy relationship with all stakeholders. SPIC considers
ethical conduct of business as one of the most important factors which will contribute to
fulfilment of the company’s corporate objectives.

C
orporate citizenship is integral to SPIC. Its social conscience runs deep, to the core of all SPIC's
operations.

SPIC strives to build mutually beneficial, interactive and trusting relationships between
the company and its many stakeholders—employees, customers, communities, suppliers,
governments and investors. SPIC serves people and society through its actions—by making
quality products in energy-efficient and environment-friendly ways.

From the very beginning, SPIC has taken a special interest in the development of the
community in Tuticorin District, Tamilnadu. Local people value the contributions that SPIC
made to employment generation in its early years.

SPIC continues to be committed to social and community causes at every level through
its various programmes: healthcare, education, sports, community engagement, and conservation.

Concentrating on below area’s

 ELEMENTARY HEALTHCARE
 SPORTS
 EDUCATION
 COMMUNITY PROJECTS

Elementary Healthcare

SPIC in association with Welfare clubs has organized more than 126 camps for the
benefit of locals in and around Tuticorin. A number of Free Medical Camps meant for treatment
of Eyes, General Health, Diabetic, Polio, Measles, Children Health, Leprosy, etc. were
conducted. Approximately a lakh of patients so far have benefited out of these camps.
Considerable number of patients recovered eye sight after having cataract operation through
these Medical Camps. Hitherto, more than Rs.12 lakhs have been spent on this noble cause.

SPIC through its welfare club adopted a village ‘’Mudukkukadu’’ near Tuticorin. Keeping the
health of the village in mind, the club organized 36 health camps continuously and has served the
village in a most effective manner.

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SPIC has also adopted Authoor and Mullakadu Primary Health Centres in Tuticorin. equipments
worth more than Rs.60,000/- were donated to the Primary Health Centres.

Education

In 1993, the Company's Research & Development R&D) wing was engaged in developing CFC
free flexible moulded polyurethane systems for use in auto mobile sector. MPL got approval for
re-endorsement of capacities under minimum economic scale size for the manufacture of 25 000
tons per annum of Propylene Glycol.

SPIC’s contribution to the rural schools in and around Tuticorin is noteworthy. SPIC has
contributed huge sum for construction of additional class rooms, improvement of sanitary
measures, adding up of playing materials, augmentation of lab facilities etc. in schools. Hindu
Poor Students Education Welfare Association, a charity unit of SPIC has donated books and
notes worth more than Rs.15 lakhs to the poor children. More than 8000 poor children have
benefited out of this scheme. The number of poor students receiving this benefit has also been
increasing every year.

SPIC has contributed benevolently Rs.10 lakhs for the establishment of ‘’SPIC Research
Centre’’ at VOC College, Tuticorin. SPIC contributed an amount of Rs.25 lakhs to Sarada
Women’s College at Palayamkottai. Using the funds, M.A. Chidambaram Block meant for
Chemistry education with a full-fledged lab system was built by them to serve the students. SPIC
contributed Rs.10 lakhs for construction of additional classrooms at St. Mary’s College,
Tuticorin.

The Club spent a lakh of rupee to renovate the buildings of Hindu Harijans Elementary School,
Tuticorin. A Noon Meal Centre was also established for the School. Today, the School which
once was derecognized due to dilapidated building, is well recognized and serving for a number
of downtrodden children. Class room facilities – in the form of rooms, benches, chairs,
blackboard etc. are provided by the club to K T Kosalram School, Muthiahpuram, Vivekananda
Vidyalaya School, Theresapuram where more fishermen community live.

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Sports

SPIC contributes a lot in the form of sponsoring prizes to the sports events of rural
schools which involves an expenditure of Rs.50,000/- a year. Sports, being a catalyst of
enhancing the spirit of National and Domestic Integration, SPIC never fails to support it.

SPIC through its SPIC Central Sports Council, every year organizes a number of District &
State level invitation tournaments both in-door (Carrom, Table Tennis, Chess, Bridge, etc.) and
out-door (BasketFriendly
Environmental Ball, Hockey, Football, Cricket, Tennis, Kabadi and Volley Ball) Games. All
Measures
India Carrom Invitation Tournament for SPIC Rolling Trophy, is a familiar one being conducted
by SPICfocus
SPIC’s Central
is Sports Councilsustainability
on achieving every year. by improving the production processes through
introduction of new technologies for cleaner environment.

SPIC has carried out the following environmental protection improvement measures
SPIC sponsors a Football team represented by school students to participate in the Chennai Third
Division FootballGranulation
 Acoustic League Tournament. It also
in Urea plant – tomaintains a turf
reduce dust cricket ground at Chennai-YMCA
emission
for the past 25 years. SPIC conducts MAC Tropy Cricket Tournament at Nilgiris every year and
 Double Contact Double Absorption Process to reduce Sulphur di Oxide emission
“ YMCA BUCK Memorial Tournament” which is conducted every year in Chennai which is
 Aluminium Fluoride Plant was installed wherein the Fluorine vapour from the
jointly sponsored by SPIC.
concentrators of Phosphoric acid plant is absorbed and converted as Aluminium
Fluoride.
SPIC also sponsors 20-20 Inter School Cricket Tournament in Tuticorin District. It also sponsors
 Elimination
a 20-20 of Cricket
District Level the use of Arsenic tri-Oxide
Tournament for Carbon di Oxide removal by use of dual
for Seniors.
activated glycine based technology.
 Switchover to environment friendly Phosphate based Cooling water treatment.
 PhaseProjects
Community out of Halon used in fire retardants which releases bromine that depletes the
ozone layer.
 Ammonia
SPIC Nagar in Lions
Cryo compressor replacingwith
Club in association Freon,
SPICan adopted
Ozone depleting substance
‘’Pottalkadu’’, near Tuticorin,

is today a ‘’Model Village’’ having a good school, drinking water facility,inbus
Green house gases reduction by way of Provision of low NOx burners reformer
shelter, toilet
 Low Sulphur Heavy Stock usage in aluminium flouride plant
facilities etc. In Adaikkalapuram Village, SPIC Nagar Lions Club built a traffic island . The Club
laida pipeline
Water conservation by reducing,
for 2 kms nearly to supplyreuse
waterand recycling
from the TWAD waterBoard
wherever
to St.possible.
Joseph Lerasorium,
 Green Belt Development in and around the factory and township.
Tuticorin. Lucia Centre for Blind and disabled, Tuticorin also obtained pumps and water tank
from theFuel switch
Club. SPICfrom fossil
Nagar to Biomass
Rotary to generate
built a water hotthe
tank for airbenefit
for drying DAP product.
of Mullakadu Village and till
this date water charges are paid by SPIC..

An STD Booth maintained by the SPIC Nagar Lions Club has employed differently abled
(handicapped) persons with a monthly salary of Rs.1,800/-. The Club built a bus shelter on the
Tuticorin – Tirunelveli highways near the by-pass road. The Club has built two other Bus
BUSINESS
Shelters one LEVEL STRATEGY:
at Muthiahpuram and the other just opposite to SPIC Nagar. The members of the
Club visit a day in a year to the Avvai Illam, an orphanage run by Gandhigramam Trust at
Major events
Sivasailam, clothes and materials worth more than Rs.10,000/- are being donated to the welfare
of the children every year.

With the aim of facilitating the Noon Meal Scheme, which is a boon to the downtrodden
children, SPIC contributed Rs.5.5 lakhs towards maintenance works of more than 100 Noon
Meal Centre’s coming under the surveillance of Udangudi, Sathankulam and Karungulam
Panchayats in Thoothukudi District. This ensured that the poor children had a hygienic
environment for dining.

SPIC has contributed Rs.5 lakhs for the construction of Tuticorin Stadium and 1 lakh towards
construction of Tuticorin Gymkhana Indoor Stadium. SPIC also for the development of its
business community, contributed Rs.1 lakh to All India Chamber of Commerce for its premises
renovation work and another lakh of rupee to the expansion works of Indian Chamber of
Commerce and Industries building at Tuticorin.
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An exquisite park developed by SPIC in front of the newly built Tuticorin Railway Station is a
mile stone showcasing the interest of SPIC in beautifying Tuticorin Town. This park embodies a
lawn adorned with the presence of a pearl model (the symbol of the City) having a fountain in it.
CONCLUSION

The company which has always been striving for total quality possesses International
Certification: ISO 9001:2000, ISO 14001:2004 and takes pride in being MONOPOLY acclaimed
as one of the major player in a PETROCHEMICAL(MPL)Industry in India.

The House of SPIC reached new heights with generations of hard work, dedications and
remains the stamp of quality, integrity and reliability under the versatile, pragmatic and visionary
leaderships

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