NOCIL a Mafatlal group company,
the first company to set up a petrochemical complex in the
country has recently received approvals from financial
institutions to go ahead with its restructuring plans. The
Company has decided to restructure the business by splitting into
three new companies viz. Nocil Petrochemicals, Nocil Rubber and
Nocil. As per the plan NOCIL shareholders will get in exchange of
every 100 shares held, 70 shares in NOCIL Petrochemicals, 16
shares in NOCIL Rubber Chemicals and 14 shares in NOCIL Plastics.
Shell will be the largest shareholder with 49% stake after it
subscribes to the preferential offer
The company reported a considerable decline in net profits to Rs
111.4mn in FY 99 from Rs 376.3mn mainly due to low demand and
global pressures on the petrochemical prices. The company is
likely to improve its profitability in the current year due to
significant cost savings.
The Shell
Montell combine has plans to invest Rs51bn by implementing a
0.45mn tpa ethylene cracker project expected to start commercial
production in FY 2003.
The petrochemical industry is capital and technology intensive.
Petrochemicals are compounds derived from hydrocarbon feed stocks
such as naphtha and natural gas. The minimum economic size of
plant is around 1m tpa of end product and entails an investment
of Rs.100bn. This leads to capacity additions in spurts. However
the demand growth linked to economic growth rises gradually. Thus
inevitable demand supply mismatches in capital intensive industry
leads to wide price fluctuations. Historically there have been
5-7 years cycles in prices.
The international market for petrochemicals witnessed lowest
level prices in the past 35 years significantly eroding the
margins of all the players in the industry. The currency crisis
resulted in slow down of the South East Asia, Far East Asia and
Japan further compounded the problems of the players in the
industry. The petrochemical industry has revived with the
recovery in the Asian economies.
Indian petrochemical industry has been for a long time state
controlled and dominated by state owned IPCL. With
liberalization, large capacity additions led by Reliance have
transformed the industry into a situation of surplus capacity and
intense competition. The severe recession in the Indian economy
had an adverse impact on the prices of different petrochemical
and rubber chemicals manufactured in the country. However the
recovery of international prices for petrochemical products along
with the recovery in the industrial scenario in the country has
improved the prospects of the players in the industry.
The conservative nature of the original promoters prevented their
foreign partner to contribute towards modernization of its old
plants and take a majority stake in the company. Besides the
company had a high exposure in group companies by way of
unsecured loans, advances and investments. The management has now
decided to allow the well known Shell group to construct a new
polyethylene plant, modernize facilities at existing site and
allow management control of the company. Besides the process of
cleaning the books has already begun with the company providing
Rs10 bn towards reserves for contingencies like interest due on
outstanding loans and write off of investments.
2002/1/25 in.biz.yahoo.com/020125/103/1ekjz.html
Nocil catalysed by stake sale reports
By capital market
According to media reports, India's largest refiner Indian Oil Corporation (IOC) is planning to buy a stake in Nocil in an attempt to fulfill its ambitious plans in the chemicals sector. An IOC team had visited Nocil's Thane plant to assess the project's viability recently. The move is likely to breathe new life into Nocil's plans to set up a 7-lakh tonne, over Rs 4,000-crore petrochemicals complex in Maharashtra.
Incorporated in 1961, Nocil is a part of the Arvind Mafatlal group in collaboration with Royal Dutch (Netherlands)/Shell (UK).
The company manufactures a wide range of petrochemicals -- ethylene, propylene, butadiene, benzene and their derivatives, polymers, rubber, chemicals and plastic products. Its clients include Good Year, Bridgestone, Yokohama and General Tyres. It has also tied-up with Dowelanco, US, to establish a joint venture called De-NOCIL Crop Protection, a deemed public company, to manufacture and market crop protection products in India. It has got two investment subsidiaries - Ensen Holdings and Urvija Investments.
Nocil operates a small 65,000 tpa
Naptha based cracker. It produces mainly HDPE, and also PVC,
Ethylene Oxide and Ethylene Glycol. The Company has minor
interest in rubber, agrochemicals and trading businesses. Nocil’s ethylene cracker’s capacity of 60,000 tpa is very small when compared to minimum
economic scale of 1m tpa currently at international level. The
Company’s plant was set up
in the early ’60s and being
depreciated, has lower fixed cost making up for dis-economies of
scale. Nocil has a capacity to produce 65,000 tpa of ethylene and
35,000 tpa of propylene, 17,000 tpa of Benzene and 10,000 tpa of
Butadene. In addition to own
production, the Company sources about 20000-22000 tons of
ethylene from IPCL through a direct pipeline. Ethylene is used in
downstream manufacturing of - Ethylene Oxides/Ethylene glycol (20,000
tpa), PVC (7000 tpa), HDPE (50,000 tpa) which are intermediates for production of
EO/ EG. The Company also has a capacity of 7000 tpa of PVC.
Post-merger of Polyolefins India Ltd (PIL), the Company has also
acquired downstream capacity to produce HDPE of 50,000 tpa.
Restructuring
NOCIL would be split into 3 independent companies viz. NOCIL
petrochemicals, NOCIL Rubber Chemicals and NOCIL Plastics. NOCIL
Petrochemicals would get the 63000 tons capacity cracker and
other downstream units, which accounted for around 70% of the
turnover in FY99. NOCIL Rubber Chemical will take charge of the
profitable rubber chemical business, which accounted for 16% of
the turnover in FY99. NOCIL Plastics will take the special grade
polypropylene, ethylene vinyl acetate co-polymers, processed
polyethylene and other small plastics business. The demerger to
be effective from Oct 1’98
is in the final stage of getting regulatory approvals from the
environmental authorities and thereafter the final approval from
the high court.
Future plans and outlook
Shell has planned Rs45bn expansion to increase its cracker
capacity to 0.45m tpa by 2003. It has also planned to set up
plants to manufacture 0.21m tpa of polypropylene, 0.45m tpa
polyethylene and 0.21m tpa of benzene/ toluene and xylene. The
company has already expressed its willingness to bring in Rs10bn
as equity funds as contribution towards the projects. Shell, the
global petrochemical giant will pick up 49% of the stake in Nocil
Petrochemicals and contribute to the mega expansion project
likely to complete only in the year 2003.
2002/6/5 Platts
India's NOCIL closes unprofitable petchems division
India's National Organic
Chemical Industries has closed permanently its petrochemicals
division at Thane, also known
as Navi Mumbai, because of lack of funds, it said in a statement
to the BSE stock exchange at Mumbai. The closure took effect from
May 21. NOCIL had a small-scale naphtha-based petrochemical
complex with the capacity to produce 75,000 mt/yr of ethylene; 40,000 mt/yr of
propylene; 65,000 mt/yr of high
density polyethylene and 12,000 mt/yr of ethylene vinyl acetate. NOCIL had posted a net loss of Rupee
254.40-mil ($5.18-mil) for the quarter ended Mar 31, 2002. It
registered a net loss of Rupee 705-mil for the fiscal year 2001,
compared with a net profit of Rupee 108-mil for FY 2000. Its
total net income (net of excise) dropped from Rupee 8.89-bil in
FY 00 to Rupee 6.72-bil in FY 01.
NOCIL's board said the
firm would continue operations at its rubber chemicals and
plastics divisions. NOCIL and Basell of the Netherlands had
previously been in talks for
an integrated, naphtha-based olefin and polyolefin complex at
Navi Mumbai, which was supposed to come onstream in 2004. Basell
withdrew from the project in June 2001, citing deteriorating
market conditions for the near-term. The project was to have
comprised a naphtha cracker with the capacity to produce 700,000
mt/yr of ethylene; 340,000 mt/yr of propylene; 700,000 mt/yr of
polyethylene; 300,000 mt/yr of polypropylene and 25,000 mt/yr of
butene-1. Basell was to have had a 51% share in the investment
and NOCIL 49%. Navi Mumbai, or "New Mumbai" is about
45km from Mumbai.
Platts 2002/9/2
India NOCIL gets approval to shut petrochemical units
India's National Organic Chemical Industries was given permission by the country's Labour Commission to permanently shut down its petrochemical units at Mumbai, the company said in a statement to the Bombay Stock Exchange. NOCIL informed the exchange that the commission gave the permission Aug 30.
The company ceased operation in May after Bharat Petroleum Corp stopped supplying naphtha to it because of mounting outstanding debts. NOCIL's naphtha-based petrochemical complex had the capacity to produce 75,000 mt/yr of ethylene, 40,000 mt/yr of propylene, 65,000 mt/yr of high-density polyethylene and 12,000 mt/yr of ethylene vinyl acetate.