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TAKE OVER OF NOCIL
Industrial Units can become sick due to variety of reasons, some of which can be beyond the control of the management.
We come across several cases, where one unit producing particular product turns out excellent performance, where as another unit producing the same product becomes sick.
There are also cases where companies have products with excellent demand potential and future prospects but become sick like that of Birla Periclase, which was set up by Aditya Birla Group to produce sea water magensia.
We also come across interesting cases of units becoming viable after remaining sick for sometime, such as that of Kerala minerals and Metals Ltd., Quilon producing rutile grade titanium dioxide by chloride process.
Whereas in the case of small scale units, one can say that inadequacies of the management of the individual units can be the reason for sickness, large units which have advantages of receiving management inputs and technical capabilities in good measures from various specialists also become sick.
The case of sick units always make interesting study.
Ofcourse, there can not be more interesting case than that of NOCIL, which was once hailed as a role model for the Indian Petrochemical sector.
Currently, Mafatlal hold 42 percent equity of NOCIL and financial institutions 26 percent. The balance is held by the public.
The plant of NOCIL was shut down after Bharat Petroleum Corporation Ltd. (BPCL), refused to supply naphtha to NOCIL as it had not received payments to the tune of Rs.1300 million for the naphtha supplied. BPCL was the sole supplier of naphtha to NOCIL.
The plant was earlier shutdown from November 28,2001, to March 4, 2002, due to financial problems. The plant has the capability to produce 80000 tonne of ethylene annually and several other very important petro chemical derivative products.
Under the restructuring scheme worked out in 1998, NOCIL was supposed to be split into three companies confined to separate business-rubber chemicals, plastic products and petrochemicals. The Shell group had agreed to pick up the stake in the petrochemicals company.
However, the scheme has come to naught.
Basell Polyolefins, the new entity formed after the merger of Shell group company Montell and BASF, informed that it would not participate NOCIL's petrochem project.
As a desperate move to reactivate atleast some part of the company and making it attractive to the buyers, the NOCIL management has applied for demerger of the petrochemical division under Section 351 and 354 of the Companies Act,
It appears that Reliance Industries (RIL) is interested in taking over the petrochemical division of NOCIL without the staff. It appears that RIL would not be interested in paying any consideration for taking over the division, as RIL would be taking over the liabilities of the company which runs into around Rs.4500 million.
The Reliance Industries could be interested in taking over the management of the petrochemical division as a separate company once the demerger process would be completed.
Earlier, the Commissioner of Labour had ruled in the management's favour for closure of the petrochemical division in March 2003. However, the labour union filed a review petition and the case was transferred to the industrial Tribunal.
Now, the employees of NOCIL have received a shot in the arm with the Industrial Tribunal rejecting the management's application for closure of the petrochemical division of the company. It remains to be seen as to how Reliance Industries would view such development.
NOCIL, inspite of its present difficulties and poor track record in the recent past has excellent potentials in view of product range, its location, etc. Building such institution takes enormous efforts and future of such projects have to be viewed with responsibility and caution.
While it is gratifying that Reliance Industries is showing interest in taking over petrochemical division of NOCIL, its apparent unwillingness to take over the employees makes one suspicious.
For any organisation, employees are as much strength as the facilities, since employees represent knowledge base. They should be treated with care and respect.
When Reliance Industries decide that it would only take over facilities and not the employees, it means that either it has contempt for the employees of NOCIL or it has no faith in the Indian scientists and technologists.
Possibly, Reliance would invite the overseas consultants or organisations to modify the equipment and introduce the appropriate technology changes and product mix.
It would be more praise worthy, if Reliance would initiate such tasks largely retaining the existing employees of NOCIL and respecting and utilising their long years of expertise and knowledge.
A sick unit need not mean that all its employees are sick.
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News and Views 
March 2004
