Tata Chemicals cement unit sale delayed

Subhadip Sircar & Sambit Datta

Mumbai, April 16: THE proposed sale of Tata Chemicals Ltd’s Mithapur cement unit in Gujarat has been put on the backburner, according to sources close to the deal. This follows the recent fire at the company’s Mithapur plant after which production had to be halted for a fifteen-day period.

Sources added that the impending sale would be taken up only at a later date. At present, the company is concentrating on optimising production at the units.

The Financial Express had earlier reported that Tata Chemicals was in talks with Gujarat Ambuja for selling off the Mithapur unit. Larsen & Toubro (L&T) is believed to be the other bidder for the unit. The deal is being handled by Infrastructure and Lease Financing Services (ILFS) on behalf of Tata Chemicals.

The Mithapur cement unit is a 4 lakh tonne capacity plant catering to the local market. Analysts point out that if the deal goes through, it will be a win-win situation for both the parties as it makes a viable proposition for those already having a strong presence in the state. The outright sale of the plant could fetch close to Rs 200 crore for the company, according to analysts.

Tata Chemicals has a marketing tie-up with ACC for cement which, after the transfer of ACC shares to Gujarat Ambuja, continues to be in place. Tata Chemicals manufactures Pozzolana Portland Cement which accounts for 3.4 per cent of the total company’s turnover.

Moreover, following the merger of the wholly-owned subsidiary, Sabras Investments and Trading with the parent, Tata Chemicals has already received a Rs 200 crore inflow out for the sale of its holding in ACC to Gujarat Ambuja. Sabras held 65.65 lakh shares of ACC, which was sold to Gujarat Ambuja at Rs 370 per share during the last financial year.

The proposed divestment is part of the Tata Chemicals restructuring strategy, under which the company has identified soda ash, sodium bicarbonate, salt and urea as its core businesses.

Cement, along with caustic soda, hydrochloric acid and chlorine have been identified as non-priority areas.