Indorama Corporation, the world’s second largest soda ash maker based in Indonesia is currently in advanced talks to acquire the Haldia fertilizer unit of Tata Chemicals Ltd for an amount up to Rs1000 crore (about US$156 million).
Negotiations are in the final stages and this deal is expected to mark Tata group’s exit from the highly regulated fertilizer business. An announcement is said to be released in the coming weeks.
In August 2016, Tata Chemicals Ltd sold its urea plant located at Babrala in Uttar Pradesh to Norway-based Yara International ASA for Rs2670 crore (about US$416.4 million). The Haldia unit, which manufactures phosphatic fertilizer was however retained.
It was earlier reported in June that the Tata Group was discussing a rationalization strategy aimed at reducing debt and boosting profit margins through divesting businesses that are underperforming or not contributing to profits.
For its Haldia unit, Tata Chemicals has capped its investment in the fertilizer segment and the company is also looking to restructure and focus on consumer and inorganic chemicals. Prior to this, it has already restructured two overseas fertilizer plants, shutting one down and suspending the operations at the other.
Meanwhile, for the Indorama group, the deal will reinforce its presence in India, especially in the eastern region where the company has been strengthening its presence.
In September last year, Indorama Ventures formed an equal joint venture with Kolkata-based Dhunseri Petrochem Ltd to produce polyethylene terephthalate (PET) resins, a raw material used in the textile and plastics industries.