Page 42 - Plastics News March 2018

Business news

BASF predicts profit gain on BPCL in race for Nagarjuna Oil

specialty chemicals rebound refinery

erman chemicals maker BASF said it was aiming for t least three contenders, including BPCL, are
Ga gain of up to 10 percent in group operating profit Avying for Nagarjuna Oil’s 6-million-tonne-a-year
this year, because an earnings rebound from specialty refinery that is on the block under the Corporate
chemicals would offset declines at its basic petrochemicals Insolvency Resolution Process.According to sources,
unit.At its basic chemicals unit, operating profit, or the public sector oil marketing company BPCL is among
earnings before interest and tax (EBIT) adjusted for those likely to submit a resolution plan.Others are an
Oman-based company and another from Singapore,
a source said declining to give more details.Major
consultants, including KPMG and Fox Mandal, are
handling the due-diligence.
The State government is likely to recommit itself to a
structured package of incentives that was formulated
for the refinery project, Tamil Nadu’s largest private
sector investment.Sources said the MoU signed during
the Global Investors Meet in 2015, which is effective,
will be renewed to shore up investor confidence.
With over 2,180 acres available with the project, and
one-off items, would likely drop by 11 percent or more potential to acquire an additional 1,000-acre contiguous
in 2018, after a surge of 67 percent in the fourth quarter, land, investors can expand the project to 30 million
the group said. Supply bottlenecks and strong demand tonnes a year. This makes it an attractive proposition,
across the petrochemicals industry have flung BASF's the source said.
commodities business into a surprise upward cycle last
year, with full-year operating earnings doubling, mirroring
similar developments at rivals such as Covestro.
Meanwhile, the profitability of its more advanced and
customised products, the group's designated growth
drivers, were hurt by the higher raw materials prices but
BASF expects fortunes to reverse this year.
The 2018 earnings gain would mainly be driven by two
divisions that specialty products such as food nutrients,
ingredients for household products, catalytic converters The Hyderabad-based Nagarjuna Oil Corporation was
or engineering plastics, BASF said.It added that the setting up the refinery at Cuddalore on the East Coast
Wintershall oil and gas division, which BASF is seeking about 200 km to the south of Chennai. Time and cost
to merge with Russian billionaire Mikhail Fridman's DEA over-runs resulted in the Rs 3,500-crore project planned
before the end of June, would also contribute to the to start in 2002 growing to Rs 12,500-18,000 crore. In
increase in profit.Crude oil gained almost 17 percent in December 2011, the project site was hit by a cyclone
the last three months of 2017 and traded at two-year and was stalled.
highs in January.

Plastics News March 2018 42