Nagarjuna Fertilisers reduces equity through share swap - Views on News from Equitymaster

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  • Apr 21, 2000 - Nagarjuna Fertilisers reduces equity through share swap

Nagarjuna Fertilisers reduces equity through share swap

Apr 21, 2000

Nagarjuna Oil & Gas Limited (NOCL), a subsidiary of Nagarjuna Fertilizers and Chemicals Limited (NFCL), is setting up a 6 million tonnes per annum capacity in Tamil Nadu. The total cost of the project is estimated at Rs 34,800 m with the cost per tonne working out to Rs 5,800. The main feature of this plant is that a major chunk of its machinery has been relocated from a German plant previously managed by Mobil. The company has made agreements with Caltex and Chevron for the supply of crude oil.

Pre-Arrangement NFCL
Equity 4,170 Assets 17,530
Reserves 7,310 Investments 4,850
Loans 16,090 Net Current Assets 5,100
    Misc. Expenditures 90
Total 27,570 Total 27,570

Post-Arrangement NFCL
Equity 2,080 Assets 17,530
Reserves 5,250 Investments 700
Loans 16,090 Net Current Assets 5,100
    Misc. Expenditure 90
Total 23,420 Total 23,420

The company plans to sell its products initially through Indian Oil Corporation (IOC), which has a strong dealer network, and which is a likely strategic partner in the project. Interestingly, IOC itself is setting up a refinery on the Eastern coast as part of its expansion plans. Whether NOCL alone will meet IOCs requirements is still not clear.

NFCL has proposed a scheme whereby the shareholders of NFCL will have a direct participation in NOCL. The company plans to issue two shares of NOCL for every one share of NFCL. Through this scheme, the company intends to reduce its equity capital to Rs 2,080 m from the present Rs 4, 170 m.

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Aug 26, 2011 (Close)


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