Companies

Indorama Holdings carrying out ‘due diligence’ of Tata Chem fertiliser biz

ABHISHEK LAW SHOBHA ROY Kolkata | Updated on January 09, 2018 Published on November 26, 2017

Process could take about 3 months

Indorama Holdings BV, Netherlands, a subsidiary of the Singapore-based Indorama Corporation, is conducting a “due diligence” assessment on its buy-out of the fertiliser business of Tata Chemicals.

According to OP Lohia, CMD, Indorama Synthetics (India) Ltd, the company is in the process of conducting a technical due diligence and the process would take about two-to-three months. This will be the company’s first foray into the fertiliser business in India.

“There are technical and legal issues. If there are any contingent liability which has not been taken care of, which should not be the case, then the due diligence will look into it,” Lohia told BusinessLine on the sidelines of Horasis Asia Meeting organised by Indian Chamber of Commerce here on Sunday.

Tata Chemicals has been looking to exit from its troubled fertiliser business and is looking to sell its phosphatic fertilisers business to IRC Agrochemicals, a subsidiary of Indorama, for a consideration of ₹375 crore.

The transaction is likely to involve transfer of its Haldia plant with a production capacity of about 1.2 million tonnes per annum, working capital and product brands but excluding outstanding subsidy amounts. Production of phosphatic fertiliser at Haldia plant during the April-June quarter was suspended due to lower sales volume and higher input cost.

On being asked if the due diligence would change the consideration amount, Lohia refused comment.

According to him, the industry is getting adjusted to GST, and 2018 would be a better year. “GST had affected the industry, any new change is challenging. But it is stabilising and 2018 will be better,” he said.

Polyester major Indo Rama Synthetics (India) is looking at a 10-15 per cent growth in topline in FY’19.

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Published on November 26, 2017
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