Date:19/09/2005 URL: http://www.thehindubusinessline.com/2005/09/19/stories/2005091902620100.htm

Back IFFCO in Rs 2,180-cr deal to acquire Oswal Chem units

Our Bureau

New Delhi , Sept. 18

THE Indian Farmers Fertiliser Co-operative Ltd (IFFCO) will acquire the di ammonium phosphate (DAP), nitrogen phosphorus potash (NPK) and phosphoric acid facilities of Oswal Chemicals and Fertilisers Ltd in Paradeep for Rs 2,180 crore.

"The deal was struck between IFFCO and the Oswals for a sale consideration of Rs 2,180 crore that includes banks and financial institutions' (FIs) exposure of Rs 1,915 crore. IFFCO has already advanced Rs 250 crore to Oswals against this deal," sources said.

The Oswal facilities include a two million-tonne capacity to produce DAP and complex fertilisers, annually. It also has a phosphoric acid plant along with railway siding facility. The asset sale which includes the entire Oswal township at Paradeep on an "as-is-where-is-basis" is the largest deal in the fertiliser sector in the last few years.

Meanwhile, IFFCO's three-member team led by its Executive Director, Mr K.L. Singh, has reached Paradeep (Orissa) to commence joint operation process.

Oswal Chemicals and Fertilisers, promoted by Mr Abhay Oswal, would hold its Annual General Meeting (AGM) on September 24 followed by a meeting of board of directors on September 25, to ratify the deal. IFFCO, on the other hand, has convened a meeting of its board of directors on September 28, sources said adding that all IFFCO directors have already been consulted on the proposed takeover.

"The 17 banks and FI consortium led by IFCI, IDBI, ICICI and SBI have exposure in Oswal Chemicals and Fertilisers. The lead banks and FIs have already been sounded out by both Oswals and IFFCO on the deal," they pointed out.

On a 100 per cent capacity utilisation, production cost of phosphoric acid has been projected to be in the range of $415-420 per tonne, which is much lower than the price of $445 per tonne prevailing in the international market.