Financial Daily from THE HINDU group of publications
Thursday, Sep 19, 2002
Industry & Economy
Deepak Fert submits price bid for RSP unit
KOLKATA, Sept. 18
DEEPAK Fertilisers and Petrochemicals Ltd (DFPL) has submitted its price bid for the fertiliser unit of the Rourkela Steel Plant.
Sources said that after the withdrawal of the public sector Rashtriya Chemicals and Fertilisers Ltd (RCF) from the race, DFPL remains the lone company in fray. Both the companies had completed their due diligence studies.
Sources indicated that though RCF was looking at this acquisition as a means of getting a plant in the eastern region, its proposed divestment might have influenced its decision to withdraw from the race.
DFPL, sources said, was an integrated company, which manufactured among other things ammonia, methanol and nitric acid. The Rs 512-crore company has its plants at Taloja near Mumbai.
However, the price bid submitted recently will not be opened till Industrial Development Bank of India (IDBI), the merchant bankers for this divestment project of SAIL, gives the go ahead. The valuation of the unit has been done by Mecon, according to sources.
SAIL is planning to offer a 74 per cent stake in the RSP fertiliser unit while retaining for itself the remaining equity so as to form a joint venture company for this unit which has been languishing for long. Sources said that of the 650 people on the rolls, RSP would be absorbing those not required by the new promoter.
The unit, which is operating on a vastly reduced scale, has a capacity to manufacture 3.4 lakh tonnes per annum of the nitrogen-rich fertiliser calcium ammonium nitrate (CAN), which used to be marketed under the brand name `Sona'. The unit also produced fertiliser intermediaries such as ammonium nitrate and liquid ammonia used for making explosives. It utilised the hydrogen available from the coke oven gas and the oxygen available from the steel melting shops of RSP.
However, withdrawal of subsidies from 2001-02 and availability of cheaper imported products affected the viability of the plant even as prices of naphtha, its prime raw material spiralled. Annual production of this unit is only around 315 tonnes per annum.
For SAIL, which is targeting a sizeable reduction in its operating losses, completing the sale within this fiscal as scheduled is crucial. SAIL is incurring a Rs 5-crore loss per month on account of this unit.
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