#Mumbai : Lack of interest from buyers has forced Tata Chemicals to put off the sale of its fertiliser business. This was to have been the first major restructuring of the Tata Group under Cyrus Mistry.
“The Tatas have given up the plan of selling the business. No major buyer had shown interest at the price the Tatas were quoting,” said a person aware of the developments. According to him, Tata Chemicals was looking for at least Rs 5,000 crore from the sale of its fertiliser business.
Tata Chemicals has a 1.2 million tonne urea unit at Babrala, Uttar Pradesh, and a phosphatic fertiliser unit at Haldia, West Bengal.
Aditya Birla Nuvo and Morocco-based OCP were approached but they were not interested because of tough market conditions. Deepak Fertilisers, IFFCO and Coromandel evaluated the business. IFFCO was the only player that had put in a bid of Rs 1,000 crore.
A source in Deepak Fertilisers confirmed the company had evaluated Tata Chemicals’ fertiliser business but decided not to bid because it did did not want to acquire a urea plant. Deepak Fertilisers is plagued by gas supply issues after the government stopped supply of natural gas to its urea units. “We see no value in buying new assets in the urea business,” the source said.
“Urea-based facilities are under stress. Huge backlogs in subsidy bills and lack of stability in gas connections are the major issues plaguing the sector,” said Saroj Poddar, chairman of Zuari Group, whose firm Zuari Fertilisers and Chemicals acquired majority control in Mangalore Chemicals and Fertilisers.
Tata Chemicals did not reply to a questionnaire sent by Business Standard. “We would not like to comment on market speculation,” said a company spokesperson.
The Tata Group under Cyrus Mistry is expanding into high-growth areas. The exit from the fertiliser business is likely driven by the government’s policies.
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