Financial Daily from THE HINDU group of publications
Thursday, Mar 24, 2005
Corporate - Alliances & Joint Ventures
Tata Chemicals to partner Chambal's Moroccan venture
Mumbai , March 23
TATA Chemicals Ltd (TCL) will be the equal third partner in Indo Maroc Phosphore SA (IMACID), Morocco, an existing joint venture between state-owned Office Cherifien des Phosphates, Morocco (OCP) and Chambal Fertilisers and Chemicals Ltd.
TCL will buy the required shares from OCP and the K.K. Birla group-owned Chambal Fertilisers for a total consideration of Rs 166 crore.
IMACID manufactures phosphoric acid, a raw material used for producing diammonium phosphate (DAP), a higher analysis fertiliser used extensively in India.
India imports 50 per cent of the global production of phosphoric acid and Morocco, the largest exporter of phosphatic rock and phosphoric acid, accounts for over 40 per cent of international trade in the acid.
IMACID produced 3,73,895 tonnes of phosphoric acid in 2004 with a turnover of $144 million.
TCL has an annual requirement of 2,50,000 tonnes of phosphoric acid, which it buys from various parties.
Now, this supply would come mostly from IMACID with any shortfall being bridged by OCP, said Mr Homi Khusrokhan, Executive Director, TCL.
Driven by an upsurge in demand, phosphoric acid prices had been globally firming up and the trend is expected to remain so for some time.
"Demand used to be flat but it grew by 2.5-3 per cent over the last 5 years,'' he said. Brazilian demand was the spur.
"Indian consumption too has risen. Tight supply is hence forecast for the acid for the next 3-4 years.
The equity participation "assures the company security of supply of phosphoric acid, builds a bond with a company that is a leading player in phosphatic fertilisers and places a footprint in new geographies outside India.
"The investment in IMACID, in fact, cements a long-standing relationship that OCP has had with Hind Lever Chemical Ltd, a company that merged with Tata Chemicals in 2004," TCL's official statement said.
In past quarters, TCL had cited the rising price of both phosphoric acid and ammonia as contributing to input cost increase.
However, Mr Khusrokhan said, the company won't pursue a measure similar to that taken in phosphoric acid, for securing ammonia supply.
Though ammonia prices are high, unlike in the acid, its demand is bigger and spread over diverse user industries.
TCL has made other arrangements to secure ammonia supply, he said.
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