The business fortunes of the Rs 2,500-crore M.A. Chidambaram group of companies (MAC), which includes fertiliser giant Southern Petrochemicals Industries Ltd (SPIC), is intrinsically intertwined with the political fortunes of the AIADMK. In 1991, when the AIADMK returned to power, the group's moving force—Chidambaram's son A.C. Muthiah—seemed invincible. Industry watchers predicted that an Ambani had finally arrived for the South.
During the first two years of the Jayalalitha regime, everything came thro-ugh for Muthiah. In 1991, the MAC group returned to the board of Tuticorin Alkali Chemicals and Muthiah became its vice-chairman. In February 1992, Standard Motors was reopened after a gap of three years. Within a week, the state-owned Tamil Nadu Industrial Development Corporation (TIDCO) approved a transfer of Rs 6 crore from the joint venture Tamil Nadu Petrochemicals (TPL), jointly promoted by SPIC and TIDCO, to reactivate Standard Motors. No one bothered to ask why exactly TPL should invest in Standard Motors. By mid-Feburary 1992, Muthiah's father M.A. Chidambaram, who was removed from the chairmanship of SPIC by theearlier DMK government was reinstated.
The turn-up in fortunes did not stop there. The state government disinvested from SPIC against the warning of the then TIDCO chairperson, V. Chandralekha, which reduced the stakes of the government to 16 per cent and increased the stake of the MAC group to 26 per cent. In the bargain, the state exchequer lost nearly Rs 60 crore and Chandralekha had her face disfigured in a gruesome acid attack. Further, the much-delayed Rs 2,000-crore joint venture between the public sector Madras Refine-ries Ltd and SPIC for a huge aromatics project—Arochem—was launched. Muthiah even decided to take on both HindustanLever and Procter & Gamble by entering into the detergent market through a joint venture—SPIC Fine Chemicals—with German giant Henkel. Muthiah also bagged the presitigious Rs 750-crore Madras-Singapore Corridor project.
As is clear today, most of Muthiah's projects have failed to deliver. Standard Motors is dead and the Bureau of Industrial and Financial Reconstruction (BIFR) has ordered the winding up of the plant. Manali Petrochemicals and its subsequent acquisition, UB Petrochemicals, are bleeding red. The much touted foray into detergents has turned out to be a fia-sco and SPIC had to renounce its substan-tial holding in SPIC Fine Chemicals in favour of Henkel. The Madras-Singapore corridor is yet to take off; as of date the project cost has escalated by 25 per cent and most industry observers feel it would be a non-starter. Even as friend Jayalal-itha's fortunes nosedive, his attempt to take over Mangalore Refineries in association with the UB group has been foiled by the BIFR. And the MRL dispute, whichever way the cookie crumbles, has put paid to Muthiah's hopes of raising Rs 455 crore from the primary market for SPIC Petrochemicals in the near future. That project too may be doomed, even if the courts allow it to go through.
