AV Birla group firm Grasim Industries on Thursday announced the sale of its fertilisers business to Indorama Corporation for Rs 2,649 crore.
In fertilisers, Grasim is one of the largest urea producer in India with a capacity of 3,340 tonnes per day. It operates across seven states in northern and eastern India, comprising a network of 1,635 distributors and around 34,700 retailers, besides having access to close to one million farmers.
Grasim said the sale will enable it to focus on its core business. It added that the fertiliser sector is tightly regulated and has a low return on capital employed (ROCE) because of high working capital and a long cycle of receivables even as it also has to deal with high maintenance cost.
Marketed under the brand “Shaktiman”, the cement business posted revenues of Rs 2,678 crore in the previous fiscal and Rs 606 crore in the first quarter of this financial year.
The company added that all assets, liabilities, litigations, brands and employees pertaining to Indo Gulf Fertilisers (IGF) will be transferred on a slump sale basis through a scheme of arrangement, subject to terms and conditions agreed between the parties. It is being done for a lump sum cash consideration of Rs 2,649 crore with certain closing adjustments. The transaction is expected to be completed in nine months.
The business is being sold to Indorama India Pvt Ltd, a step-down subsidiary of Indorama Corp which is the largest producer of urea and phosphate fertilisers in sub-Saharan Africa and the largest producer of polyolefins in west Africa.
“The divestment of the fertiliser business by Grasim is a strategic portfolio choice and unlocks value for the shareholders,” said Grasim Industries managing director Dilip Gaur.
