For the first time in 35 years, the National Organic Chemical Industries Ltd (Nocil), an Arvind Mafatlal group company, yesterday failed to declare dividend to its shareholders.
Addressing irate shareholders at the 38th annual general meeting, Arvind N Mafatlal, chairman of Nocil, said, "The company had to forego dividend as it is going through extreme financial constraints."
Earlier, in his statement to the shareholders, he stated, "The prices of petrochemical products in domestic as well as international markets were at the lowest level during the year resulting in significant erosion of margins. In view of these adverse conditions of the company was unable to make sufficient profits during the year. I am, therefore, extremely unhappy to announce that for the first time in the history of this company we are unable to declare any dividend to the shareholders."
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The company has recorded a decline in its turnover of Rs 625 crore for the eight-month period ended November 30, 1999 compared to Rs 695 crore during the corresponding period last year. The company's exports for the period under consideration stood at Rs 36 crore against Rs 42 crore in the same period of previous year.
On the company's performance during the current year, Mafatlal said, "The year 1999-2000 is likely to be very challenging as a result of a volatile market place with fluctuating price-deviations and surging price-increases of the basic feedstock naphtha."
Mafatlal told shareholders that the company has filed an application with the Bombay High Court to restructure the company thereby demerging it into three companies.
The assets and liabilities of the petrochemicals and polymer division will be demerged and vested with Nocil Petrochemicals, that of rubber chemicals will be with Polyolefins Rubber Chemicals Ltd, whilst the remaining assets and real estate properties, investments and subsidiaries will be retained in the residual Nocil.
Mafatlal opined that the court may convene a meeting, probably in the month of March, with the shareholders to discuss and deliberate the demerger plan of the company.
After the court approves the demerger plan, Shell and Montell will subscribe to the 49 per cent of the equity in the Nocil Petrochemicals. Similarly, the Onkar Singh Kanwar group has also agreed to take a controlling stake in the Polyolefins Rubber Chemicals Ltd.