Murugappa group in a 3-way JV in Tunisia, plans Rs300 crore capex

Chennai: Two Indian companies – Coromandel Fertilisers Limited and Gujarat State Fertiliser Corporation Limited (GSFC) – and Tunisia's group Groupe Chimique Tunisien, have entered into a three-way joint venture to set up a phosphoric acid manufacturing plant in Tunisia.

For the Indian companies, the Tunisian venture would tie-up a steady supply of phosphoric acid, a critical raw material for the manufacture of phosphatic fertilisers and DAP. It is more so for Coromandel Fertilisers and another Murugappa group fertilizer company, Godavari Fertilisers and Chemicals Limited, which together consume around 4.5-lakh tonne per annum of phosphoric acid. The demand is expected to grow by 20 to 40 per cent over the next three years.

The proposed joint venture will be located at the existing site of Groupe Chimique Tunisien, at La Skhira and will share some of the existing facilities and services.

The total project cost is estimated to be around $180 million and is scheduled to be completed by 2008.

Says V Ravichandran, president and whole time director, Coromandel Fertilisers, 60 per cent of the total project cost will comprise debt and the remainder will be the equity component. "The two Indian companies, Coromandel Fertilisers and GSFC, will contribute 15 per cent each to the JV's equity while the Tunisian group would contribute the remaining 70 per cent."

According to A Vellayan, chairman of Coromandel Fertilisers and Godavari Fertilisers, with this joint venture Tunisia continues to be the major source of phosphoric acid and the fertiliser companies in the Murugappa Group and GSFC are assured of steady supply to manufacture different grades of phosphatic fertilisers.

India has an annual demand of around 4.5-million tones of phosphoric acid. Typically, out of the high-grade phosphatic fertilisers produced in India, around 65-70 per cent is produced using imported phosphoric acid.

This is the second major announcement from Coromandel Fertilisers, after yesterday's announcement of its intention to set up a pesticide plant near Jammu. The investment for the pesticide plant will be around Rs6 crore.

The Murugappa group is planning to invest anything between Rs250-300 crore in expanding its fertiliser business.