Applications invited for investors to revive Nagarjuna Oil

An Expression of Interest from investors to revive Nagarjuna Oil Corporation (NOC) has been invited by the Insolvency Resolution Professional appointed by the National Company Law Tribunal (NCLT).

Financial investors — mutual funds, private equity and venture capital funds, domestic or foreign investment institutions and others — may also apply. A Corporate Insolvency Resolution Process has been initiated with regard to NOC under the Insolvency and Bankruptcy Code (IBC).

NOC is currently implementing a six million tonnes per annum (mtpa) petroleum oil refinery project on the southeast coast, at Cuddalore, around 200 km south of Chennai. It was partially complete in December 2011, when a cyclone and shortage of funds stopped work. With fund infusion, the refinery can start production in two to three years, after completing the remaining work. The plant is capable of meeting Euro-VI motor emission requirements, with some additions. Land is also available for expansion up to 30 mtpa. Structural financial assistance is also available, said the IRP.

Since 2012, NOC has been looking for a strategic investor to pump in fresh equity and revive the project. While its management was not available for comment, insiders say to recommence the project, the company would require around Rs 15,000 crore, including debt and principal amount. Around 15 lenders have invested in the project and later the banks sought Reserve Bank of India dispensation in view of the assets likely to be classified as nonperforming.

The IBC gives 180 days for a resolution and an one-time extension of 90 days. After this, the NCLT may appoint a liquidator to wind up the company. As the lenders and creditors don't want this, as they will then loose a lot of money, they are keen on reviving the project by bringing an investor.

“We have got some proposals from a few strategic investors, mostly outside India,” said a senior official, on condition of anonymity.

Last year, Nagarjuna Oil Refinery Ltd got its board of directors' approval to dilute 46.78 per cent in NOC, a company it had set up. Earlier, Singapore-based Netoil showed interest in investing Rs 3,600 crore. Then, it was reported that Indian Oil Corporation was planning to take over the refinery but neither of these events took place.

Sources in the company said it needs about Rs 4,000 crore in equity, so that around Rs 8,000 crore of debt, including principal, could be raised to revive the project. If the debt is not included the company might need only around Rs 1,000 crore to revive the project. “We don't have any problem except money, and once the money is in, the project can be completed and commissioned in 18 months,” said the official.