The Hindu Business Line : Nocil spurts on `Reliance interest'

IN an otherwise volatile market, the stock of National Organic Chemical Industries Ltd (Nocil) surged ahead to hit a new high intra-day, amidst rumours that Reliance Industries may be looking at buying out Nocil's petrochem business.

There was also speculation of a possible property sale by Nocil. Brokers said that Reliance has been very active at the counter in the recent past.

"These rumours have been doing the rounds of the market for some time. While at this juncture it appears to be pure speculation, there is no doubt that there is some corporate development in the offing,'' sources said. The stock of Nocil ended the day at Rs 22.15, up 12.15 per cent with around 59.09 lakh shares traded on the NSE. On the BSE, the stock ended the day at Rs 22.25, up 12.94 per cent with around 49.99 lakh shares traded.

Analysts maintain that the synergy would appear to be right for such a deal to be in the offing. Nocil's plant -

located on the Thane-Belapur road - is said to be practically adjacent to IPCL (a Reliance group company's) plant. "It makes immense sense purely from a linkage point of view. In the sense that RIL could use Nocil's plant to manufacture polyethylene by routing ethylene from IPCL's plant,'' an analyst reasoned.

Nocil also makes certain speciality grades which do not feature in either RIL's or IPCL's product portfolio. Opinion, however, remains divided over whether RIL would be interested in acquiring a plant with such a small capacity. Nocil reportedly has a capacity of around 60,000 tonnes. "There is also quite a bit of real estate that goes along with the plant. The company may not want the associated assets. Hence, there could be a conflict of interest on that ground," said an analyst.

Speculation over synergies and interests apart, the bottomline would be the price, say market sources. "It is a question of looking at it in totality and putting a value. Of course, the price could become really competitive if there was say an interest by some overseas player looking for a foothold in India,'' sources said.