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Nocil likely to wind up unit on debt problems

Our Bureau

MUMBAI, May 13

BHARAT Petroleum Corporation Ltd (BPCL) has asked troubled petrochemical firm Nocil to settle its dues of over Rs 100 crore before closing down its unit.

Nocil, unable to find a suitor, is finally thinking of shutting down its petrochemicals unit, which employs around 900 people. The management has offered VRS to all employees, a company official said.

Nocil owes around Rs 110 crore to BPCL on account of naphtha purchases. Faced with serious financial difficulties, the company stopped production at its petrochemicals plant from April 14, 2002.

BPCL stopped naphtha supplies on credit six months ago. It, however, continued supplying against cash payments.

"Since the Nocil management is planning to wind up the unit, we will have to ensure now that our payments are recovered", said a BPCL official.

"Nocil has been our customer for a long time. The company is now in trouble. We have to understand the situation. Though the petrochemical unit is closed down, there are other plans. The company has other assets. We are hopeful of getting our dues," said the official.

Sometime ago, Nocil had suggested that BPCL pick up an equity stake in the company. However, BPCL declined.

The Mafatlals-owned Nocil was let down by the Shell Group last June when it backed out of an MoU to acquire promoters' stake in the company, that too after conducting due diligence for more than a year. Nocil has since been searching for a partner willing to invest in its proposed modernisation and investment plan.

The Mafatlals hold 42 per cent equity in Nocil, while financial institutions hold 26 per cent. The remaining is being held by the public.

In December 2000, Basell Polyolefins, a 50:50 joint venture between Shell and BASF, indicated that it was prepared to pick up 76 per cent stake in Nocil, including the 42 per cent held by Mafatlals. But Basell Polyolefins changed its mind by June 2001.

It had cited two reasons for its sudden change of mind. Firstly, an international company, which was supposed to partner Basell, in the deal had backed out. Secondly, the global petrochemicals scene was not encouraging enough to make fresh investments in the sector.

The company, a leading name in the petrochemicals field, is now being forced to wind up its plant.

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