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Wednesday, Feb 13, 2002

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Rashtriya Chem eyes 74% stake in SAIL unit

Archana Chaudhary

MUMBAI, Feb. 12

FERTILISER major Rashtriya Chemicals and Fertilisers (RCF) plans to buy 74 per cent stake in Steel Authority of India's Rourkela Fertiliser Plant (RKFP).

"We have completed due diligence of the plant and are in final stages of negotiations with SAIL and its advisors, IDBI,'' Mr S. Balan, Director (Finance), RCF, told Business Line.

RCF may pick up 74 per cent as a strategic alliance partner (SAP) in the proposed joint venture company, which will manage RKFP after the buy. The naphtha-based plant, situated 414 km from Kolkata, has an installed capacity of 360,000 tonnes per annum and produces calcium ammonium nitrate, ammonium nitrate and nitric acid.

The proposed joint venture may need an investment of approximately Rs 100-crore for upgradation, with a debt equity ratio of 2:1. Both companies will bring in half of the equity. "RCF will hold management control in the joint venture company,'' Mr Balan said.

RCF has been looking at acquisitions in order to access the markets in the eastern parts of the country, while SAIL has announced plans to divest its non-core businesses including Visvesvarya Iron and Steel plant and RKFP in order to focus on its core activities.

"The project does not require substantial investments on our part, unlike Paradeep Phosphates which we decided to stay away from due to the high debt burden on the company,'' Mr Balan said.

The company has stayed away from bidding for PPL, which was among the first companies in the sector to be put up for divestment. And it has also decided to bid for Hindustan Organic Chemicals Ltd (HOCL).

"All our expansion plans will, to a large extent, depend on the much-awaited long-term fertiliser policy. Once the Government gives clear signals on issues such as retention pricing and reducing subsidies on urea, etc, we will be in a better position to plan our future goals,'' he said.

Meanwhile, the company has shelved its capital restructuring plans for the time being. RCF had earlier announced that it planned to halve its Rs 551- crore equity capital. The company had also said that it would bring down the 92.5 per cent Government holding in RCF by 15 per cent, subject to regulatory approvals.

RCF, a zero-debt company, is on the Government's disinvestment list.

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