The Arvind Mafatlal Group yesterday ended its six-year hunt for a foreign partner to fund its petrochemicals expansion plan by agreeing to sell the business to the Royal/Dutch Shell group after a series of demergers.
Shell had split with the Mafatlals six years back due to differences over the same expansion plan. It has now agreed to return, but with conditions attached.
Under a memorandum of understanding signed yesterday in Mumbai, Shell has agreed to infuse fresh funds to kick-start the expansion plan, which has been lying dormant for 13 years. It will also provide technical support.
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The Mafatlals, in turn, have agreed to completely restructure Nocil. Starting today, they will demerge the petrochemicals, rubber chemicals and plastic products business into three separate companies, which will be listed on the stock exchanges.
The new companies will issue shares to existing shareholders in a ratio that gives more weight to the petrochemicals company. 70 per cent of Nocil's equity of Rs 122 crore will be vested with the petrochemical company, 16 per cent with the rubber chemicals arm and the remaining with the plastic products division. The demerger will be effective from October 1.
The petrochemical company to be called Nocil Petrochemicals Ltd will then make a preferential allotment to Royal Dutch\Shell group giving them a 49 per cent stake. They will also have complete management control. The stake of Mafatlal Industries Ltd (MIL) stake of 42 per cent will be diluted to 21.5 per cent.
The Nocil scrip remained lacklusture. From its previous close of Rs 33.20 on the BSE, the stock closed at Rs 35.55 after an intra-day high of Rs 35.80. Volumes were Rs 2.3 crore.
At Nocil's AGM yesterday in Mumbai, Arvind Mafatlal, chairman AMG assured shareholders the allotment will be at a fair price. "We have fixed a floor price of not less than Rs 29 per share," he said.
He also announced the polyvinyl chloride business will be shut down. Notices have been issued to employees and the unit will not function after March 31, 1999.