The Hindu Business Line : IFFCO works out plan to revive venture in Senegal

At a glance
Investment to be directly contributed by IFFCO, or generated ICS operations.
Till Dec 2006, ICS cumulative loss at around Rs 1,300 cr.

Phalguna Jandhyala

New Delhi, Dec. 17 The Government of Senegal and The Indian Farmers Fertiliser Cooperative Ltd (IFFCO) have inked an understanding for the revival of Industries Chimiques Du Senegal (ICS), a joint venture between the Governments of India, Senegal and IFFCO.

In the joint venture company the Indian Government holds 6.97 per cent equity stake, IFFCO holds 19.06 per cent and Government of Senegal 47 per cent. The company has an installed capacity of 6.6 lakh tonne (lt) of phosphoric acid and 80 per cent of the production capacity is currently imported by IFFCO under a long-term offtake contract.

As per the memorandum of understanding (MoU) signed recently, IFFCO has agreed to inject $100 million into ICS in the next three years with a view to increase the production to the optimum level of efficiency. This investment would be directly contributed by IFFCO or generated from the operations of ICS.

Into losses

“In the last three-four years the company was incurring losses and till December 2006 the cumulative loss was at around Rs 1,300 crore. The production of phosphoric acid was also suffering and the company was utilising only 30 per cent of its installed capacity. Though IFFCO was trying for the last two years for a revival, they were not able to arrive at an agreement,” an official in the Department of Fertilisers told Business Line.

“In July this year the Government of Senegal had agreed to a proposal from IFFCO which said it would place around $80 million in ICS, but it suffered a setback with the former entering into a separate agreement with French company, Groupe Roullier, as they thought it was a superior offer. This agreement not only threatened the availability of phosphoric acid to India under the long-term contract but also would have given the management-control of ICS to the French company,” the official added.

Further, there was a deadline (December 17) for the submission of a viable restructuring plan of ICS, Senegal. “But now things have been sorted out. We have also got to know that the MoU has been ratified by the Regional Court of Dakar,” the official said.

According to him, around 5.5 lt of phosphoric acid would now be available from the plant which would be helpful in production of 1 million tonnes of diammonium phosphate or 2 million tonnes of complexes. The Department is also hoping this have some moderating effect on the increasing trend of international prices of acid.

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