Shell, Nocil reach pact finally

Montell will invest over 1.2 billion in the new project to be completed by 2003. The expansion and modernisation of programme of the new company will be termed project Lotus8217; and headed by a Shell representative GeanMichell Couteau.

It may be recalled that Shell which held nearly 30 per cent stake in Nocil earlier sold the stake to the Mafatlals three years ago following differences of opinion with the latter over majority control in the company. The Mafatlals were negotiating with several parties for technical and financial collaboration mainly for expansion of the existing petrcohem business.

8220;Nocil is being demerged into three separate companies, Nocil Petrochemicals with Montell, a rubber chemicals company and residual businesses which include other subsidiaries and plastics business,8221; said Nocil chairman Arvind Mafatlal at the company8217;s 37th annual general meeting held in Mumbai.

The shareholders will get shares in each of the three companies in a rough proportion of 70 per cent in the petrochemicals venture, 16 per cent in rubber chemicals and the balance 14 per cent in the residual company. Valuation for the same is being conducted. Mafatlal said that the company is working at deriving an odd lot schemefor the shareholders which will take care of the odd lots after the demerger.

Since Nocil Petrochemicals exists as a company on paper, shares will be issued in Nocil Petrochemicals. The minimum price at which the shares will be issued on a preferential basis is Rs 29 per share. The announcement comes after hectic deliberations of over three years in a bid to improve the financial situation of Nocil which, according to Mafatlal, would have otherwise quot;gone into liquidation.quot;

Mafatlal told shareholders that quot;Old friend Shell is coming as a shareholder with a 49 per cent stake. I can assure you that it is going in safe hands and the shareholder value will only go up. Your company has a bright future.quot; The petrochemical company will set up a new international cracker complex with a capacity of 4.5 lakh tonne per annum which will be further enhanced to 5.56 lakh tpa at the existing site of Thane-Belapur near Mumbai at a cost of Rs 4,500 crore.

quot;I8217;m quite confident that you will be rewarded,quot; he promisedshareholders. While explaining to the inquisitive shareholders the rationale behind the demerger deal and the fact that management control would be in the hands of a foreign company in the petrochemicals company, Mafatlal explained:quot;The pertinent question was that of finance, not that we do not have the capabilities, but because the plant expansion was a must. Otherwise we would have run into losses and become a sick company. Thus there arose the need for a suitable partner who takes full responsibility of the management.quot;

Nocil8217;s performance has been affected and so has been the subsequent dividend declared during 1997-98, due to the worst kind of downturn which hit the industry. Nocil has posted sales of Rs 442 crore in the first five months of the current fiscal as against Rs 406 crore in the corresponding period last year. Exports during the period have been higher at Rs 24 crore as against Rs 19 crore in the same period last year.