HOWZAT

Crotty is one of the top five directors in the Ineos empire, but there are 19 people with the title of chief executive. Each division is run as a fairly autonomous fiefdom, reporting direct to Ratcliffe.

Ratcliffe still owns about 75% of Ineos. Every time it acquires a new business, 10% of the equity is offered up for sale to employees. Those shares are not shares in the group, but shares in the business where those employees work. Dividends are paid out only when the particular site or business is profitable.

Ratcliffe and his senior executives are long-term veterans of the chemicals industry. Although he shuns publicity, Ratcliffe is a hands-on boss. “One of the things Jim always says is ‘love your machines’,” said one Ineos executive.

Ratcliffe began his career at Esso and then moved to Courtaulds. In 1989, he joined Advent, the American private-

equity firm, with a remit to fund investments in the chemicals sector. Three years later, he and another chemicals investor, John Hollowood, led a £40m buyout of BP’s Kent-based speciality chemicals business.

Ratcliffe has told friends he put all his wordly goods into the company, which listed on the stock exchange in 1994 as Inspec.

After a flurry of deals, Inspec’s value soared, eventually leading to its sale to Laporte for £611m in 1998. Ratcliffe bought back Inspec’s petrochemicals arm with backing from the private-

equity firm Murray Johnstone and named it Ineos. Having never warmed to the City, Ratcliffe resolved to keep his new company private.

Ineos has ploughed about $15 billion into acquisitions over the past 10 years, and further billions into investment.

The row at Grangemouth is over plans to close the final-salary pension scheme to new members. Ineos justifies the move on the grounds that it is about to spend £750m on the plant over the next seven years to ensure it remains competitive.Ineos has also invested £400m at Runcorn since it bought the plant in 2001.

The speed that comes with being a private company, controlled by one individual, is a large part of why Ineos has been so successful.

Chris Tane is the chief executive of Ineos ChlorVinyls, Europe’s biggest PVC manufacturer. “I’m working at the same level I was at within ICI,” he said. “If I wanted to make an investment in the plant previously, I had to go through various secretaries, who would then set up meetings with senior people. Now I just phone Jim Ratcliffe.”

Ineos’s biggest deal was the $9 billion takeover in 2005 of Innovene, the BP chemicals business that had been scheduled for a stock-market listing. That deal increased the company’s revenues by a factor of four — and brought the Grangemouth refinery into the Ineos fold.

Crotty describes the Innovene deal as one of two “step changes”, the other being last year’s £500m takeover of Norsk Hydro’s PVC business, which made Ineos the biggest PVC producer in Europe. Ineos is now Europe’s No 1 or No 2 producer for most types of plastics.

As far as Ineos is concerned, the credit crisis is no impediment to doing deals, in spite of the group’s huge dependence on debt. Ineos made pre-tax profits in 2007 of €470m (£370m), after paying out more than €50m on interest payments. Crotty, however, said there was still sufficient firepower in the group’s existing credit facilities to do a few more deals this year.

“In 2001, we bought the old ICI businesses, and we levered up to five times earnings for that deal,” said Crotty. “We then worked that down to below three times.

“Then we did the Innovene deal in 2005 and we levered back up to a similar level to where we were for the ICI deal. All the other numbers were an order of magnitude higher, but the leverage was a little lower. We have now brought that back down into the threes again.”

He added: “The debt is there, we pay it off. It would be difficult to go and do another Innovene deal tomorrow — where we had to refinance the whole business — but we are still doing deals. It’s a way of life for us.”