RCF reviews plans to buy 74% stake in SAIL

Praveen Chandran
19 September 2002

Mumbai: Rashtriya Chemicals and Fertilisers (RCF), the public sector fertiliser company, is reviewing its plans to buy 74-per cent stake in Steel Authority of Indias (SAIL) Rourkela fertiliser plant. Says a senior RCF official: Considering the revamping exercise that would have to be undertaken in the plant after acquisition, we have decided to review our earlier plan to go for a majority stake in the Rourkela plant. We feel the acquisition may not be feasible for the company.

RCF had completed due diligence of the plant and was in the final stages of negotiations with SAIL and its advisor, Industrial Development Bank of India. The naphtha-based Rourkela plant has an installed capacity of 360,000 tonnes per annum and produces calcium ammonium nitrate, ammonium nitrate and nitric acid. It is estimated that the acquisition price and the plant upgrading price together would cost around Rs 200 crore to RCF, says the official.

RCF has been looking at acquisitions in order to access the markets in the eastern parts of India. However, even its plan to bid for Hindustan Organic Chemicals is likely to hit a roadblock if the government bars all the public sector undertakings from participating in the divestment process. It is not clear whether the new policy will be applicable only to the oil PSUs or all the public sector units concerned, adds the official.

He, nevertheless, says: All our expansion plans will, to a large extent, depend on the much-awaited long-term fertiliser policy. Once the government gives clear signals on issues such as retention pricing and reducing subsidies on urea, we will be in a better position to plan our future goals.

The company, in the meantime, has shelved its capital restructuring plans. RCF had earlier announced its intention to halve its Rs 551-crore equity capital. It had also said it would bring down the 92.5-per cent government holding in RCF by 15 per cent, subject to regulatory approvals. Currently, RCF is a zero-debt company.