Reliance In Fray For Stake In Nocil

Private sector textile and petrochemicals major Reliance has joined the race to pick up a stake in the petrochemicals business of the Arvind Mafatlal groups (AMGs) National Organic Company (Nocil).

Besides the obvious synergy between Reliances and Nocils operations, the Reliance move is also being seen as one to prempt global majors like Dow Chemicals and LG Chemicals from gaining an entry into India by picking up a portion of the Mafatlal stake in Nocil.If a multinational company coming into the country were to pick up a stake in Nocil, it will have the advantage of joining an established player with an established market, an industry source pointed out.

 

Talks are on with Reliance, besides other companies, an AMG source told Business Standard. A Reliance spokesman, however, denied that there was any such move on Reliances part to pick up a stake in Nocil. A fax sent to Hrishikesh Mafatlal went unanswered.

Reliance supremo Dhirubhai Ambani has, in recent times, visited the Mafatlal premises on a couple of occasions for discussions on the subject, AMG sources said. The Nocil board met last week to take a decision on the issue. However, the details of the meeting could not be ascertained.

Interestingly, last month, Nocils executive director V V Surya Rau, who had been with Nocil for 30 years, quit the company and joined Reliance as in-charge of the companys Patalganga project.While promoters hold around 45.25 per cent stake in Nocil, institutions hold another 28.97 per cent.

Earlier, the Arvind Mafatlal group had decided to split Nocil into two companies one for the petrochemicals business and the other for rubber chemicals. The group had been in talks with various petrochemical majors for a participation in the petrochemical company.

The companys planned Rs 5,500-crore cracker project was to have been undertaken through the new petrochemical joint venture company.

The project, which had been pegged at Rs 4,800 crore, had been revised to Rs 5,500 crore subsequently.

Initially, negotiations had been on for an equal joint venture and the LG group of S Korea, Dow Chemicals, Phillip Petroleum and Montell Polyolefins of the Royal Dutch Shell group had been forerunners for the venture.

Subsequently, however, the Nocil management felt that given the limitations of the size of the company, handing a majority stake to a partner could add value to the venture. Hence, the management has not been averse to giving off a majority stake to a partner.

A tentative offer price of Rs 55 per share had been worked out though the actual transfer price was expected to be higher than this.

Reliance, it was learnt, stepped into the fray to prevent its global competitors from joining hands with Nocil.

The Rs 1,276 crore company is planning to continue with its rubber chemicals and plastic products business, which contribute upto Rs 400 crore to the companys turnover. The agro-chemical business of the company was earlier spun off into a separate joint venture with Dow Elanco and is currently known as De-Nocil.