KOCHI: The decision by the loss-making Mumbai unit of Hindustan Organic Chemicals Limited (HOCL), HOCL-Rasayani, to sell its 442 acres of land to BPCL has come as a boon to the HOCL-Kochi unit as the latter will be getting a pie from the sales proceedings.
The deal assumes significance in the wake of the Union Budget turning a blind eye towards HOCL.
The amount will be sufficient for the Kochi unit to repay its debt of Rs 120 crore to BPCL-Kochi Refinery. The sale will also clear the way for HOCL-Kochi to merge with BPCL-Kochi.
HOCL-Kochi, which had been making profit, slipped into loss after the profit earned here was invested in the loss-making Mumbai unit.
“A meeting of the audit committee and board of directors of HOCL will be held on February 8 to discuss sale of the Rasayani land to BPCL and 20 acres of land and machinery to the ISRO. The meeting will also conduct a valuation of HOCL’s assets. The final decision on the matters is subject to shareholders’ consent,” said the company in a report submitted to stock exchanges.
Last week, BPCL had made a proposal to buy the land for Rs 1.3 crore/acre with certain conditions, including proper title deed and removal of encroachments.
“The deal will benefit HOCL-Kochi as we would be able to clear our debts. The amount raised through the sale of land will be utilised to offer VRS to some employees of HOCL-Rasayani,” said HOCL Joint Action Council member Shaji R.
HOCL-Kochi is situated on 120 acres of land at Ambalamugal and employs 550 persons, including 337 permanent employees. There are also over 100 pensioners. According to a valuation carried out by SBI in 2015, HOCL-Kochi is worth Rs 500 crore.
Earlier, BPCL-Kochi had stopped supply of raw materials to HOCL after the latter failed to pay dues of Rs 120 crore.
“The company is all set to restart production using advance amounts collected from customers. We are confident we can run the company profitably, if we have sufficient working capital,” said an officer at HOCL-Kochi.
M P Sukumaran Nair, chairman of the Public Sector Restructuring and Internal Audit Board of Kerala, said the state government had taken a stance that BPCL-Kochi should extend financial help to HOCL-Kochi.