Spic Ltd, flagship of the Chennai-based industrial house Spic, is entering into a joint venture with Caltex Oil Corporation of the US for operating in the liquefied petroleum gas (LPG) segment in the country.
The Indian company also proposes to sell its existing LPG division to its proposed joint venture with Caltex Oil Corporation .
The joint venture, which will undertake various activities in the LPG segment in the country, also proposes to acquire Spics LPG terminals at Chennai, Madurai and Tuticorin.
While Caltex proposes to pick a majority stake of 51 per cent of the shareholding in the proposed joint venture company either through Caltex Oil Corporation or any group company of Caltex Petroleum Corporation, the balance 49 per cent will be held by the Indian partner.
The venture will have a paid-up capital base of Rs 100 crore.
In their application to the government, which received the nod of the Foreign Investment Promotion Board (FIPB) in its last meeting, the two partners have proposed to bring half of their respective equity investment in the form of cumulative redeemable preference shares.
Thus, while Caltex will bring in Rs 25.50 crore as equity investment and another Rs 25.50 crore in cumulative redeemable preference shares (CRPS), SPIC will put in Rs 24.50 in the form of equity investment and an equal amount as CRPS.
However, FIPB has allowed the company to retain flexibility to issue the preference shares as equity shares in case the final project cash flows require it.
The proposed Caltex-Spic joint venture intends to enter into the activities of import, storage and distribution of LPG, bottling and sale of the LPG, and setting up additional facilities for import, handling and storage of LPG as well as auto LPG.
