 "NOCL's Rs 18,000 cr refinery project in TN stuck over Rs 24 crore")
NOCL was promoted by K S Raju promoted Nagarjuna Group, which held 47 per cent and 25 per cent held by Tata Sons and Tata Petrodyne. This is one of the projects, in which Tata Sons has invested outside the Tata Group.
Singapore-based Netoil signed term sheet with the investors to acquire the stake and committed investment upto $600 million (around Rs 3,600 crore). Sources say that Netoil signed for “a high” discount. Which means both Nagarjuna Group and Tata Sons, who have invested Rs 776 crore and Rs 400 crore respectively and will be exiting with a loss.
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Sources in the company said that the company requires interim funding of Rs 24 crore and backlog of staff salaries since November 2014. Netoil and some of the lenders like SBI and its Associates, Bank of India, Corporation Bank and Canara Bank has not pitched in, alleged a source. Failing to pay this may result in Tamil Nadu Government canceling the MOU and the GO as these stakeholders have not fulfilled their commitments, he says. Government officials were not available immediately for comment.
"We are not officially recognised as investors by the shareholders and lenders of NOCL. There is a restructuring process need to be completed and today there was a meeting related to the same and it went on well. The company is negotiating with minority shareholders. It is not the question of Rs 24 crore, considering the company's wealth and seriousness it want the project to be up and running. We are seriously considering to take over the project. So far $8 million have been spent for financial, technical and legal due diligence. We hope to do the financial closure by end of October," said Netoil.
An email sent to the lead Banker (State Bank of India) did not responded till the time of this story going to press.
Tamil Nadu Government has issued a GO on September 16, 2015, after the company entered into an MoU with the State government in the recently held Global Investors' Meet, with a “liberal” structured package of incentives, including the VAT refund as soft loan at 0.1 per cent interest to be repaid after 16 years.
Company's official said in Net Present Value (NPV) terms, if the VAT refund is Rs 18,000 crore (minimum is Rs 12,400 crore and maximum is Rs 18,000 crore), the company has to repay only Rs 15,000 crore in today's value. In other words, the company will receive its entire entitlement of VAT refund of Rs 18,000 crore at the rate of Rs 3,000 crore every year in the the first six years after commissioning.
The company can utilise around 80 per cent of this Rs 3,000 crore, ie. Rs 2,400 crore every year for any purpose it desires, e.g. repay the debt, go in for expansion and modernisation etc. The company needs to keep only the remaining 20 per cent or Rs 600 crore in FD for 16 years and that is enough to repay Rs 3000 crore plus 0.1 per cent interest after 16 years, explains a senior official, who don't want to be identified.
Netoil made a written offer to K S Raju, Chairman of Nagarjuna Group in April 2015 to bring in an advance of $ 10 million (around Rs 66 crore) to pay for backlog of salaries and preservation of equipment. Later they reduced this Rs 24 crore as a short term loan but till date even this has not been given.
NOCL staff numbering 170 (150 at Cuddalore Site and 20 at Chennai Office) have not been paid salaries since November 2014. Service providers at the site including transporters, diesel suppliers, housekeeping contractor etc have been physically threatening the staff for non-payment of their dues.
Netoil has said that it is ready to invest $600 million (around Rs 4,000 crore) of fresh equity and buying out all current shareholders except TIDCO at 82 per cent discount to the face value. Till date, the NOCL staff have never voiced their suffering to any potential investor over the past 4 years, said NOCL sources.