The K K Birla-promoted Zuari-Chambal group is preparing to bid for the state-owned Paradeep Phosphates Ltd in association with OCP of Morocco.
Chambal Fertilizers & Chemicals Ltd, the Zuari-Chambal group flagship, has an equal joint venture (JV) with OCP in Morocco called Maroc Phosphate. This JV has invested $228 million in setting up a phosphoric acid plant in Morocco.
Some time back, Zuari Industries, another Zuari-Chambal group company, had expressed its interest to pick up a controlling stake in Paradeep Phosphates for Rs 400 crore.
More From This Section
According to sources, OCP has huge reserves of rock phosphate, which is used to make phosphoric acid -- a raw material for di-ammonium phosphate (DAP).
By buying into Paradeep Phosphates, OCP can secure a market for its rock phosphate. At the same time, the Zuari-Chambal group will get a better grip on the DAP market in the country. At the moment, both Chambal and Zuari import DAP, though Zuari produces some DAP at its plant in Goa.
The group intends to leverage its marketing network to sell the Paradeep Phosphates produce.
Sources also said that OCP has been roped in by the group as Zuari is not financially strong and would, thus, require a partner. "Of the two Zuari-Chambal group firms, Chambal is financially stronger," the sources said.
Chambal has declared its intention to acquire a 51 per cent stake in the National Fertilizers (NFL) for Rs 900 crore. Chambal is looking at issuing redeemable non-convertible preference shares worth Rs 200 crore to bankroll its proposed acquisition of NFL. These shares will be issued to a strategic investor and not the promoters.
The other companies which have shown an interest in Paradeep Phosphates include Tata Chemicals, A V Birla group company Indo Gulf Fertilizers and Abhey Oswal-promoted Oswal Chemicals & Fertilizers Ltd.
However, Oswal Chemicals and Fertilizers is known to be reviewing its interest in the state-owned fertilizer company on account of the liabilities on the company's books, though Paradeep Phosphates plant is situated close to its own plant, also at Paradeep.