Mumbai, May 25
TATA Chemicals Ltd (TCL) on Wednesday informed that , it has made an open offer for 1.475 million shares of $100 each of Egyptian Fertiliser Company (EFC) through its wholly-owned subsidiary, Homefield International Pvt Ltd, subject to required approvals.
While the company has not disclosed the figure, press reports put the bid price at $450 million (Rs 1,956 crore). It is believed that half-a-dozen players are in the running for the plant. On the BSE, TCL's stock closed marginally higher at Rs 165.60 from the previous close of Rs 164.
According to a TCL's statement, EFC, established in 1998, is located in the Suez Industrial Zone in Egypt and manufactures urea and ammonia. It is a free trade zone company owned partly by the public (46 per cent - being banks and insurance companies) and partly by private companies (54 per cent). The bidding process is an outcome of the Egyptian Government's disinvestment policy and the plant is considered quite attractive, given its newness, life of at least 25 years, tax-free status (as it is in a free trade zone) and access to Egypt's natural gas reserves.
EFC has a plant to manufacture about 400,000 tonnes of ammonia and 650,000 tonnes of urea, employs about 400 people and has a marketing presence in Europe, North America and Africa. Its cost of production is deemed low. The company is in the process of doubling its capacity (in both urea and ammonia) before the end of 2006. Work for this is already halfway through. For TCL, funds for the bid would come from its recent $150-million foreign currency convertible bond issue, internal accruals and a bridge loan.
"The bid has been submitted in line with our growth aspirations. We are one of the bidders and this open offer is subject to counter offers by other parties. TCL has recently acquired one-third stake in a Moroccan joint venture, IMACID in March 2005 and we are on a continuous lookout for domestic and global opportunities. It is too early to comment on the exact details," Mr P. K. Ghosh, Chief Financial Officer, TCL, said in the statement.
TCL has been on an expansion path since it acquired and merged the erstwhile Hind Lever Chemicals Ltd (HLCL), a move that brought into its fold the latter's Haldia-based phosphatic fertiliser plant of over 1.2-million tonnes (mt) capacity. TCL's own fertiliser capacity at Babrala in Uttar Pradesh is 742,000 tonnes a year with an ammonia plant of 1,350-tonnes-per-day capacity alongside.
Soon after HLCL came aboard, TCL had run into issues of input cost increase, most notably the higher price of phosphoric acid and ammonia. The Rs 166 crore-investment in Morocco's IMACID was made to secure phosphoric acid supply. It is believed that if the EFC bid proves successful, then it would be of great help on the ammonia front.