The Hindu Business Line : EID Parry mulls acetic acid unit sale

The plant was set up in 1996 at an investment of about Rs 20 crore to produce 10,000 tonnes of acetic acid a year, from alcohol derived from the company's Nellikuppam sugar unit.

But now there are factories in the western region that can produce the acid cheaper from petroleum derivatives. According to EID Parry sources, the `petroleum route' was not allowed when the company set up the acetic acid plant.

Company officials said while selling the plant was one option, they were also trying to find out if some equipment could be put to any other use.

Alfa Laval, (an engineering firm), has been hired to study this.

EID Parry's annual report for 2002-03 (the latest) gives no clue about the plant's state of affairs.

Under the `Management Discussion and Analysis Report', it says the industrial alcohol unit had produced 11,196 tonnes of acetic acid, which is notably more than the installed capacity.

There is, however, a general statement saying the company "has been focusing on improving the operating efficiencies of the units and also resorting to various cost reduction measures to become one of the least cost producers."

On Monday, EID Parry's shareholders approved a resolution to write off Rs 30 crore against the share premium account. This means the company will knock off Rs 30 crore from both `fixed assets' on the asset side of the balance sheet and `share premium account' on the liability side.

The Rs 30-crore represents the value of assets, such as the acetic acid plant, that have lost their relevance to the company, though they may still have a market value.

The depreciated value of the plant is put around Rs 17 crore. This amount is to be written off against the company's share premium account.

About Rs 13 crore represents the value of one kiln in the company's sanitaryware plant at Dawos and the organic manure plant at Nellikuppam. The Dawos plant was acquired by EID Parry four years ago from Johnson Peddar.

At the meeting, shareholders grilled the company's Executive Chairman, Mr M.V. Subbiah, on the "faulty acquisition."

"It was my mistake. I accept my mistake on behalf of the entire board. But who does not make mistakes?" Mr Subbiah replied. He said the executive who had handled the deal was "no longer with us."

Company officials later clarified to Business Line that only a part of the Dawos plant was to be scrapped, but the plant's overall production had gone up.

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