The Hindu Business Line : Bengal State Co-op Bank too will fund Kribhco-Shyam's acquisition project

WEST Bengal State Co-operative Bank Ltd will be one of the financiers for Kribhco-Shyam Telecom joint venture's acquisition of Oswal Chemicals and Fertilisers Ltd's (OCFL) urea plant. Out of the Rs 1,900-crore acquisition, the Bengal-based cooperative bank, along with its affiliate district cooperative banks, would be chipping in Rs 250 crore.

The fertiliser cooperative's plea for funding has, however, been turned down by ICICI Bank. But, IDBI Ltd has sanctioned Rs 450 crore, the Kribhco Finance Director, Mr B.D. Sinha, told Business Line.

Two foreign banks, namely Citi Bank and Deutsche Bank, have also sanctioned $1 billion each, Mr Sinha said.

The sanctioned funds are yet to be transferred to the company's accounts. Only Rs 130 crore has been transferred by West Bengal Cooperative Bank to the company's account till now and it is expected that the other transfers would take place in a day or two, Mr Sinha said.

The payment of Rs 1,200 crore that is to be made to the Oswals will be done next week.

The acquisition of 60 per cent of the urea unit through a joint venture with the Shyam Telecom group by Kribhco for Rs 1,900 crore, as valued by Edelweiss Capital Ltd, had drawn the attention of the fertiliser industry for several reasons.

According to sources in the Fertiliser Association of India (FAI), two other private companies too had examined this plant.

"Last year, Tata Chemicals and Indo-Gulf Fertilisers had examined the plant and their offers ranged between Rs 800 and Rs 1,250 crore. This new valuation done by Edelweiss Capital has taken all by surprise," sources associated with the deal said.

Kribhco found the valuation justified. According to Mr Sinha, "It is a very profitable company and its profit will go up."

According to profitability data of the Sahajanpur unit, the net profit from the Sahajanpur operations, as obtained from company sources, stood at Rs 124 crore for fiscal 2004-05. The net profit as of March 2004, March 2003, March 2002 and March 2001 stood at Rs 140 crore, Rs 55 crore, Rs 101 crore and Rs 68 crore, respectively.

Kribhco is optimistic that this can be doubled almost overnight. This year, the company is likely to make a net profit of around Rs 230-240 crore, Mr Sinha said.