Nocil, Mafatlal Arms To Be Hived Off

The Arvind Mafatlal Group is hiving off two divisions each from Nocil and Mafatlal Industries to form a new firm with a combined turnover of over Rs 400 crore.

The rubber chemicals and plastics division of Nocil is being spun off to allow Nocil to focus on its core business of petrochemicals. Navin Flourine and Navin Chemicals, the chemicals arm of Mafatlal Industries, are also being hived off and may be merged with Nocils divisions to form a separate chemical entity.

Nocil will remain a pure petrochemical company and will form a joint venture with a foreign major to complete its Rs 5,500 crore cracker expansion project. Details are being worked out, said a source.

 

In 1995-96, the rubber chemicals division contributed Rs 150 crore to Nocils total turnover of Rs 1,276 crore. Plastics contributed Rs 70 crore. Navin Flourine and Navin Chemicals contributed Rs 167 crore to the companys total turnover of Rs 865.86 crore. Nocil inherited the polymer, rubber chemical and plastic products business from Polyolefins Ltd (PIL). Rubber chemicals had contributed 60 per cent of PILs turnover.

The agrochemical business of Nocil has already been spun off into a separate joint venture with Dow Elanco and is called De-Nocil.

The latest move comes after the company announced last year it wants to sell stake to a foreign multinational company to help it complete the Rs 5,500 crore cracker project. Though no decision has been taken yet, Lucky Goldstar of South Korea, Dow Chemicals and Phillip Petro of US and Montell Polyolefins of Netherlands are the companies that have been shortlisted.

A tentative offer price of Rs 55 per share has been worked out. Source said, the joint venture talks are for a equal partnership, though keeping in mind the global nature of the business and Nocils limitations of size, if it was felt, that giving off a majority to the strategic partner would add value to the venture, then Nocil could look at that option as well, the source said.

The companies that Nocil is talking to are all keen to have Mafatlal as a partner and hence the question of selling off the entire Arvind Mafatlal group stake in Nocil did not arise, source added. Once the restructuring of the company is complete, the Arvind Mafatlal group would concentrate on the growth of the core rubber chemical, plastic product, and other chemicals business, while the petrochemical joint venture would concentrate on the expansion plans that Nocil had identified in 1995.

The possible partners are committed to the expansion plans, source said.

The new revised estimates for the companys expansion plans formulated in 1995, involves an investment of Rs 5,500 crore up from the previously envisaged Rs 4,800 crore, and a substantial chunk of the funds is expected to come from the strategic partner in the form of debt as well as equity.

The first phase of the expansions is expected to go on stream in the second half of 2000.

The basic engineering and technical tie-ups for the project are already in place and Nocil has already invested Rs 300 crore towards the project.

Rubber chemicals, plastic products to be demerged into separate company

Petrochemicals, polymers to form part of joint venture

Base price at Rs 55 per Nocil share

Petrochemicals expansion project cost up at Rs 5,500 crore

Substantial part of the investment to come as debt and equity from partner

Venture part likely in 2 months

Phase I of expansions to go on stream in 2000

Nocil turnover: Rs 1,276 crore

Rubber chemicals: Rs 150 crore

Plastics: Rs 70 crore

Mafatlal Industries turnover: Rs 865.8 crore

Navin Flourine, Navin Chemicals: Rs 167 crore