Reliance, IPCL ponder tolling plan

19 May 2003 00:00  [Source: ACN]

Reliance Industries and Indian Petrochemicals Corp Ltd (IPCL) are evaluating whether to enter into a tolling arrangement involving the latter's cracker complex in Baroda, Gujarat, India, sources close to the two companies told ACN.

Under a proposal that is being studied, Reliance would meet the entire naphtha requirement of the Baroda cracker from its refinery in Jamnagar, Gujarat. It would also supply catalysts as well as other raw materials.

In return, Reliance would pay a conversion fee to IPCL and market the petrochemicals produced at the Baroda complex.

According to one source, the conversion fee is likely to be a percentage of the value of IPCL's plants in Baroda.

IPCL runs a 130 000 tonne/year cracker at Baroda.

It also operates a number of derivative plants including ldPE, PP, PVC, acrylic fibre, acrylates, polybutadiene rubber and linear alkyl benzene facilities.

Products such as polymers would be packed in bags that would state that the material has been produced by IPCL and marketed by Reliance, said a second source.

A decision on the tolling arrangement is expected to be made within the next month. If approved by the directors of the two companies and the Indian government, which has a stake in IPCL, the proposal would be implemented immediately.

The tolling arrangement is expected to help reduce the tax burden for the two companies.

Retirement scheme   

Indian Petrochemicals Corp Ltd (IPCL) has introduced a voluntary retirement scheme to trim manpower costs.  

Manpower-related costs accounted for around 7% of IPCL's turnover of Rs5.79bn (US$1.22bn) in 2002-03. IPCL, which operates three cracker complexes, has over 13 000 employees on its payroll. 

The retirement scheme, which is available to employees who can produce a doctor's certificate stating they are medically unfit, offers two months' pay for every year of service, or the number of years until retirement, whichever is less. 

The scheme closes on 17 May. 

According to sources close to the company, the scheme has been well received. One source estimated that more than 1000 employees have shown interest. 

According to a second source, another retirement scheme is likely to be introduced later this year.

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