Duncans to exit fertiliser business

Gouri Prasad Goenka-promoted Duncans Industries will exit the fertiliser business and focus on plantation.

The ailing fertiliser unit briefly re-opened in 2005, but was shut down again. At today's prices, at full production, the fertiliser plant would have raked in a turnover of about Rs 1,250 crore.

The company is in the process of identifying buyers for the fertiliser business, which owns the brand 'Chand Chhap' and its mascot 'Chand Chacha'.

G P Goenka, chairman, Duncan group, said he had shown interest in getting out of the fertiliser business, but nothing concrete had emerged.

Duncans Industries has two divisions "" fertilisers and tea plantations. The fertiliser business was likely to be demerged from Duncans.

Goenka explained that the buyer would only pay for the assets and liabilities of the fertiliser operations. However, it was up to the buyer. If the buyer wants only the assets then it might not be demerged. The fertiliser unit has a plant in Panki, Uttar Pradesh with a capacity of around seven lakh tonne of urea.

Goenka said that the brand "Chand Chhap" would play a critical role in determining the valuation of the operations even though it was currently not available in the market.

The fertiliser unit became sick after the subsidies were revised by the government with retrospective effect from 1997.Consequently, the company's subsidy dues amounting to Rs 430.96 crore was withheld by the government, which led to suspension of operations at the fertiliser plant since March 2002. The fertiliser plant recommenced on August 30, 2005 and was shut temporarily on October 18, 2005 for carrying out essential repairs and maintenance.

Expected disbursement of subsidy was delayed by the government and coupled with the steep increase in the price of naphtha, resulted in acute shortage of working capital. Goenka said Duncans would now focus on the plantations business, which has a production of 15 million kg with gardens in Dooars and Terai.

The sale of fertiliser was part of the consolidation exercise in the G P Goenka group.

The group has decided to close down Consolidated Fibres and Chemicals Ltd (CFCL), manufacturer of acrylic fibre.

However, Goenka was likely to retain manufacturer and exporter of cement, Andhra Cements, integrated pulp and paper mill, Star Paper Mills and multi-product engineering company, Stone India. Goenka was in the process of expanding these companies.