Tata Chemicals Ltd will sell its Babrala urea plant and distribution business in Uttar Pradesh to Norway’s Yara International ASA for $400 million, giving the European company a significant presence in the world’s second-largest fertilizer market. This transaction does not include specialty products and complex fertilizers.
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The company will continue to own the brands Paras, TKS and Daksha.
The agreement will be subject to regulatory approvals and sanctioning by the relevant courts in India, a process which is expected to take 9-12 months.
The turnover of the Urea Business for the year ended March 31, 2016 was Rs.2,301 crores and formed 21.20% of the turnover of the company.
“Unlocking value by sale of part of its assets; and strengthening the balance Sheet, pursue growth opportunities in line with the strategic directions was the rationale behind the deal”, the company said. “The company is pleased to have found a strong partner to parent its urea business”, said R. Mukundan MD, Tata Chemicals.
The BSE group “A” stock of face value Rs. 10 touched a 52 week high of Rs. 483 on 08-Aug-2016 and a 52 week low of Rs. 310.05 on 26-Feb-2016. The government fixes the maximum retail price of urea and reimburses the difference between MRP and cost of production to manufacturers.
As of the June quarter, Tata Chemicals had subsidy dues of Rs 1,479 crore.
When asked about this, Yara Managing Director Sanjiv Kanwar, without quoting figures, said, “We will only receive what is entitled to the Barbala plant”. “We will place great emphasis on successful integration of the operations, and will put in place an integration team consisting of highly experienced TCL and Yara employees, the latter from both our existing India operations and our regional management”, said Terje Knutsen, SVP and Head of Yara Crop Nutrition.
This is the first investment in India by Yara, which has been present in the country for the past two decades.
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Yara is an Oslo-headquartered company with Dollars 13.4 billion revenue in 2015, present in 27 major markets and 15 countries.
