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Reliance to take over Nocil division

Our Bureau

Mumbai , Jan. 7

RELIANCE Industries Ltd on Wednesday said it had agreed to take over the ailing petrochemicals and plastics division of erstwhile rival National Organic Chemicals Industries Ltd (Nocil) through its business associate, Sunbright Cement Agencies Pvt Ltd.

With this acquisition, Reliance, which already holds 70 per cent of India's petrochemicals business through its 12.8-million-tonne petrochemicals capacity, will take on another 65,000 tpa of ethylene, 35,000 tpa of propylene, 17,000 tpa of Benzene and 10,000 tpa of Butadene capacity. Around 45 per cent of Reliance's revenues come from the petrochemicals business.

According to a senior Nocil official, completing the takeover process will take around four to six months. "Reliance had expressed interest (in buying the business) last year. But things did not work out. We have been negotiating over the last couple of months before reaching this agreement," the official said. The price RIL would pay was still being worked out, he said.

The Arvind Mafatlal group-promoted Nocil has been in financial and labour trouble for the past few years. The company shut down on April 16, 2002, after a string of failed restructuring proposals.

Under the restructuring proposal discussed on Wednesday by the Nocil board, the company will be divided into three divisions — petrochemicals, plastics and rubber. Assets and "certain liabilities" of the petrochemicals and plastic products divisions will be transferred to wholly owned subsidiary Nocil Petrochemicals Ltd. Assets of the rubber chemicals division will remain with Nocil.

Nocil Petrochemicals Ltd will be taken over by Sunbright Cement Agencies after the demerger is completed.

Liabilities of the secured creditors will be settled on terms agreed between Nocil, NPL, SCAL and the creditors, Nocil told the Bombay Stock Exchange.

The company is also trying to sort out labour troubles that began after around 600 employees challenged the Labour Commissioner's August 2002 order to shut down the plant. Legal battles are still under way.

The company's stock has moved up substantially in the last three-four months on rumours of Reliance's interest in Nocil. It moved up from Rs 4.90 on April 30, 2003, to Rs 14.92 in November 2003. It closed at Rs 24.90 on the BSE on Wednesday.

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