Tata Chem puts domestic expansion plans on hold

Tata Chemicals Ltd (TCL) has decided to put its domestic expansion plans on hold due to low gas supply.

“Unless there is more gas in the pipeline, there will be a problem with ramping up production (at the Uttar Pradesh plant of the company). We are ready more or less with the engineering work, but unless we get gas, the expansion is on hold,” said Mr R Mukundan, Managing Director, Tata Chemicals Ltd.

Mr Mukundan was speaking at a conference to announce that TCL will invest $170 million in phase 2 of its investment in Gabon. Earlier this week, the company had announced that it had acquired a 25.1 per cent stake in the ammonia-urea fertiliser complex in the African country for $290 million (nearly Rs 1,300 crore).

“We have acquired 25.1 per cent stake in stream 1 (phase 1) and are expecting to hold a substantially higher one in stream 2... We are expecting to invest $170 million in stream 2,” Mr Mukundan said.

The complex is being set up through a joint venture with Olam and the Gabon Government at an investment of $1.3 billion and it will have a production capacity of 1.3 million tonnes per annum initially. On Monday, TCL announced that it would invest nearly Rs 1,300 crore for its stake in the ammonia-urea fertiliser complex at Gabon.

The schedule for executing phase 2 of investments will be decided jointly by Olam International, Republic of Gabon and TCL over the next 24 months. The project is envisaged to have a capacity of 2.6 million tonnes per annum.

Elaborating on the funding of the initial $290 million for acquiring 25 per cent stake, Mr Mukundan said $82 million would be raised through preferential allotment of shares, sale of investments worth $68 million over next three years and the balance through debt funding of $140 million.

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