Tata Chemicals Ltd has completed the sale of its phosphatic fertilisers business to a step-down unit of Singapore’s Indorama Corporation at more than double the price initially agreed.
The Tata group company said in a stock-exchange filing on Friday it has completed the sale of its phosphatic fertilisers business to IRC Agrochemicals Pvt. Ltd, a wholly owned unit of Indorama’s Dutch arm, after receiving the requisite regulatory approvals and fulfillment of conditions precedent.
Tata Chemicals received Rs 872.84 crore ($130 million) from IRC Agrochemicals on June 1. This includes Rs 572.76 crore in cash and the balance by way of letters of credit or bank guarantees.
Subsidy receivables were not included in the transaction, the company said, referring to the payout fertiliser companies get from the government for selling their products to farmers below cost.
The transaction value is higher than the Rs 375 crore Tata Chemicals announced in November 2017. This is due to higher working capital deployed in the business due to seasonal sales requirements and the level of activity in the factory, Tata Chemicals said in an email response to a query from VCCircle.
The sale of the phosphatic fertilisers business will help Tata Chemicals focus on its speciality chemical and food businesses. In August 2016, Tata Chemicals had agreed to sell its urea business to a local unit of Norwegian firm Yara International ASA for Rs 2,670 crore ($400 million).
The company’s speciality chemical portfolio includes sodium bicarbonate business, agrochemicals through its subsidiary, Rallis India, and planned investments in new projects for nutraceuticals and highly dispersible silica. The food business includes pulses and spices under the Tata Sampann brand and edible salt brand Tata Salt.
Indorama Corp, along with its subsidiaries in Asia and Africa, has interests in manufacturing polyethylene, polypropylene, polyesters and fertilisers, including phosphoric acid.
Indorama is owned by India-born Indonesian billionaire Sri Prakash Lohia. It has interests in manufacturing polyethylene, polyesters, fertilisers, textiles and synthetic disposable gloves.