UP govt selling Indo Gulf Fertiliser stake

The Uttar Pradesh government, which is the co-promoter of Indo Gulf Fertilisers along with the Aditya Birla group, will offload its entire stake in the company.

The state held 8.05 per cent through its industry development arm, Pradeshiya Industrial and Investment Corporation of UP Ltd, better known as PICUP.

PICUP divested around 5 per cent in December 2004, the majority of which was bought by the Aditya Birla group investment arm TGS Investment & Trade (P) Ltd, through offmarket deals.

Sources close to Indo Gulf informed that the managing director of PICUP, Anil Swarup, resigned from the board of Indo Gulf on Monday following the decision of PICUP to get out of Indo Gulf.

Besides, A V Birla group, Dena Bank has acquired around 0.90 per cent from PICUP through a pledge agreement.

Indo Gulf's plant is in Jagadhispur, near the state capital Lucknow.

PICUP managing director Anil Swarup told Business Standard that the divestment was for mobilising resources for the state-owned corporation.

"We have huge liabilities. We are trying to come out of the red by selling resources," he said.

According to him, PICUP had a negative networth of Rs 365 crore and a liability of over Rs 900 crore. The average interest on the debt burden is around 14 per cent.

Swarup said PICUP will try to optimise return from the sale of its stake in Indo Gulf.

"We shall sell our remaining stake once the share price goes up further. We might sale it to the AV Birla group too if we get a good value," he added.

He did not divulge the price at which PICUP sold around 4.69 per cent stake to TGS Investment. Neither did an Aditya Birla group spokesperson.

The Indo Gulf scrip is now hovering around Rs 127-130. It touched a 52-week high of Rs 131 on December 30, 2004.

Going by the current price yardstick, the value of PICUP's 8.05 per cent stake would be around Rs 50 crore.

Aditya Birla group now holds around 55.69 per cent in Indo Gulf, while the co promoter UP government holds 2.7 per cent. The company earned a net profit of Rs 16 crore on a turnover of Rs 241 crore in the quarter ended September 30, 2004.

Incidentally, the Aditya Birla group is increasing the capacity of Indo Gulf by more than 3.5 lakh tonne per year from the present 8.64 lakh tonne per year through an investment of abour Rs 150 crore.

The company has already submitted an application to the Union fertiliser ministry for approval.