Tata Chem to invest Rs 500 crore in Dhaka

Tata Chemicals, a Tata group company manufacturing chemicals, fertilisers and food additives, is planning to invest Rs 450-500 crore in the western region of Bangladesh to set up a million tonne gas-based fertiliser unit.

The plan is part of the $ 2 billion investment proposed by the Tata group to set up three plants, steel, fertiliser and power, based on the natural gas from Bangladesh.

The proposed urea plant is expected to feed the fertiliser requirement of Bangladesh and India. Urea is the most widely consumed fertiliser in India, accounting for around 60 per cent of the country's fertiliser consumption.

Prasad Menon, managing director, said, "if every thing works out well, the urea plant can be commissioned within four years from the date of approvals."

However, Menon claimed that there was no clarity as to where the unit was expected to be located and quantum of gas to be supplied to the proposed fertiliser unit. "We are looking at entering into a long-term agreements for gas supply and all will depend on it", he added.

Menon pointed out that the company was almost becoming debt free with its debt-equity ratio presently at 0.31.

"We earlier reversed the downtrend in the company and then consolidated. It is now time to look at growth. We are looking at all options including opportunities (inorganic) for growth", Menon added.

Tata Chemicals, whose second quarter results were affected primarily as a result of tightening of supply of phosphoric acid and ammonia which resulted in reduced di-ammonium phosphate (DAP) production, is now planning to securitise the supplies of its feedstock.

It is evaluating the option of picking equity in phosphoric acid manufacturing companies overseas. At present, it sources phosphoric acid from Jordan and Morocco.

Ratan N Tata, chairman of Tata group, had last week visited Bangladesh and signed a memorandum of understanding to set up a 1,000 mw power plant, 2.4 million tonne steel plant and one million tonne per annum urea plant.

In the 1990s Bangladesh discovered major natural gas reserves in the north-east region. The government had been inviting multinationals to invest in the downstream industries based on natural gas.