Hind Organic Droops On Rcf Pullout Talk

The share price of Hindustan Organics Chemicals Ltd (HOCL) dropped 17 per cent to Rs 25.15 on unconfirmed reports that Rastriya Chemicals and Fertilisers (RCF) had decided to pull out of its bid to acquire the government's 32 per cent stake in the company. The stock hit an intraday low of Rs 24.50. About 7.22 lakh shares changed hands at the counter on the Bombay Stock Exchange.

The rumours were that RCF has withdrawn from bidding over concerns about HOCL's rising losses. For the full year ended March 31, 2002, HOCL's losses increased to Rs 91.70 crore from Rs 39.06 crore in the corresponding period last year. Net sales slipped 26 per cent to Rs 302.48 crore from Rs 407.86 crore.

 

RCF's interest in HOCL was mainly because of synergies in operations. But the huge losses as well as the financial burden of HOCL's joint venture, Hindustan Fluro Carbon (HFC), may have proved daunting. HFC was declared sick and was placed under the Board for Industrial and Financial Reconstruction (BIFR).

With RCF reported to be moving out, the other major players left in the race are Vam Organic, Chambal Fertilisers, Atul Ltd and Deepak Fertilisers.

Although HOC is a loss making company, there's much interest in in the company due to its capacity to manufacture a large variety of chemicals under one roof as well as due to the underutilisation of its capacities in the case of many of its chemicals.

The government plans to invite price bids for selling a 32.6 per cent stake in the company. Currently, the government holds 58.6 per cent stake in the firm. After disinvestment, this will come down to 26 per cent. As per reports, the final financial bids for the company are expected to be called by the end of June 2002.

Earlier, there were reports that the government has planned a restructuring package for the company to make it more alluring to bidders. The package would involve writing off some debts and losses and a voluntary retirement scheme. The package has still not been announced.

In January 2002, there were reports that HOCL planned raising Rs 100 crore through private placement of bonds. The bonds are to be guaranteed by the government of India and the proceeds would go towards discharging high cost debts.

Incorporated in 1960, HOCL gave an impetus to the development of downstream units in sectors such as dyes, drugs, pharmaceuticals and rubber chemicals. The first unit was set up at Rasayani, Maharashtra, and subsequently, another at Kochi, Kerala (in 1988). HOCL procured technologies from Japan, the UK, the US and Germany to manufacture quality products with maximum efficiency.

The company's present product line includes nitroaromatics, phenol, acetone, aniline and acetanilide. Its products have been exported to a large number of countries including China, Japan, Singapore, Malaysia, the UK, the US and Switzerland. The company's Cochin unit has been accredited with ISO-9002 certification for its phenol and acetone products.