MUMBAI: Tata Group on Wednesday said it has sold its Urea business, part of Tata ChemicalsBSE -0.59 % to Pune-based Yara Fertilizers India for a consideration of Rs 2670 crore.
“The board has agreed for the transfer of the business of sale and distribution of Urea and customized fertilisers, manufactured by the Company at its plants located in Babrala, Uttar Pradesh by way of a slump sale by the Company to Yara Fertilisers lndia Private Limited,” the company said in its filings to to the stock exchanges.
Pune-based Yara India is the Indian arm of Norway’s Yara lnternational ASA. Yara India imports, sells and distributes plant nutrition products in lndia.
According to the company filings, the turnover of the urea business for the year ended March 31, 2016 was Rs 230l crores and formed 21 .20% of the turnover of the Tata Chemicals. Tata Chemicals called the part sale of the business as a move to unlock value. “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.
This process of divestment by Tata Chemicals is in line with the strategic direction of the company to continue to strengthen the Fertiliser businesses by partnerships and/or transfer of ownership to world class companies. “The Urea business will now have the benefit of International network of Yara and its global expertise,” the release said.
Tata Chemicals will continue to own the brands Paras, TKS and Daksha. This transaction does not include specialty products and complex fertilisers.
The Babrala plant has an annual production of 0.7 million tonnes ammonia and 1.2 million tonnes urea, and generated revenues and EBITDA of respectively $350 million and $35 million in the financial year ended 31 March 2016. The plant was commissioned in 1994, and is the most energy efficient plant in India.
“This marks a decisive move on the part of the company to move forward on its strategy to build consumer business while maintaining leadership in inorganic chemicals business and focusing the farm business through its subsidiary RallisBSE -1.25 % and Metahelix. The company is pleased to have found a strong partner to parent its urea business,” said R. Mukundan MD, Tata Chemicals.
Tata Chemicals owns one of the most energy-efficient urea units in the country at Babrala, Uttar Pradesh, as well as a phosphatic fertiliser unit at Haldia, West Bengal. The company also owns 33% in a joint venture in Morocco named IMACID, which sources the phosphoric acid needed in production of di-ammonium phosphate (DAP) at the Haldia unit.
“We are impressed with the world-class operations we have seen in Babrala. The workforce is committed to high HESQ standards, and has a solid safety track record. This well operated plant and its highly skilled employees will make an excellent addition to Yara’s global production system,” said Svein Tore Holsether, President and Chief Executive Officer of Yara.
Investment bank JM Financial and Kotak Mahindra Capital Co. advised Tata Group on the deal.
[Source: Economics Times]