The board of Zuari Agro Chemicals (ZACL), at its meeting held on 22 February 2021, has approved the sale of its fertilizer plant in Goa and the associated businesses to the group’s joint venture Paradeep Phosphates Ltd (PPL) for a total consideration of $280 million.
Zuari, one of the oldest agro chemical. plants in Goa which belongs to Aditya Birla Group is engaged in the manufacture, sale and trading of fertilizers and seeds. The chemical firm is also an importer of fertilizers and farm nutrients. It produces fertilizers of various grades, along with seeds, pesticides, micro nutrients and specialty fertilizers. The Goa unit is engaged in the manufacture, distribution, imports and sale of urea, DAP and various grades of NPK fertilizers.
Zuari Agro Chemicals reported net loss of Rs 46.25 crore in the third quarter of 2020 as compared to a net loss of Rs 118.50 crore in third quarter of 2019. For the financial year 2019-20, the net worth of the Goa unit was a negative Rs 650.15 crore.
Considering these losses Zuari Agro Chemicals’ board had, in June 2020, given its ‘in-principle’ approval for the sale on strategic and financial grounds. Proceeds from the transaction will be used to ‘take care of the long term liabilities’ of Zuari Agro Chemicals, the company said in a regulatory filing.
The business transfer agreement is expected to be executed in February 2021 and the expected date of completion is 30 June 2021.
PPL is a joint venture between Zuari Agro and Morocco-based OCP Group. PPL is engaged in the manufacturing Di-Ammonium Phosphate (DAP), complex fertilizers of NPK grades, and Zypmite (Gypsum based product), trading of fertilizers, ammonia, neutralized phospho- gypsum, micronutrient and other materials.
The divestment of the Goa plant by ZACL is aimed at consolidating the group’s bulk fertilizer business. With this restructuring, the company now has a clearly earmarked venture into specialty nutrients and retail through its wholly owned subsidiary Zuari Farm Hub Ltd and the bulk business of Goa plant and Paradeep operations consolidated under its joint venture, Paradeep Phosphates, the company said in a statement.
Further the group intends to grow the bulk fertilizer business through PPL and Mangalore Chemicals & Fertilizers and the speciality business through Zuari Farm Hub, it added.