S Korean conglomerate LG Corporation has dropped out of the race to pick up a majority stake in Nocil, a Arvind Mafatlal group company, leaving the field clear for US major Dow Chemicals and Montell, a subsidiary of Royal Dutch Shell.
Top LG sources in Delhi said they had dropped the plan after discussions with the promoters but refused to divulge the reasons. We were interested but dropped the idea as the timing was not right. We might come back at a later stage, top LG executives said. They maintained that neither price nor the state of the plant was the issue as UBs polymer division, which they bought over last year, was also an old one.
LGs exit leaves the field clear for Dow Chemicals and Montell to win the bid for Nocil. Mafatlals hold 46 per cent in Nocil, and wanted to divest to finance the companys over Rs 4,000 crore expansion plan at Thane. Last year, LG had bought out UBs polymers business thereby marking its presence in the country.
LG has big plans in petrochemicals in India, and is planning a naphtha cracker either alone or in collaboration with a domestic company. Industry sources in Mumbai said LGs exit would have something to do with location of the plant at Thane which is an environmentally sensitive zone.
Any expansion at the site would be closely scrutinised by the government, and the process could get delayed because of the sensitive nature of the issue.
The Nocil plant is running on old technology, and that is one of the reasons for the Mafatlals wanting to upgrade and expand capacity.
The news of LGs entry in the fray had sparked off a bull run on Nocils stock at the Bombay Stock Exchange last week with the scrip touching its 52-week high recently.
