Yara Acquires Indian Urea business

12.08.2016 -

Norwegian fertilizer group Yara International has agreed to buy Tata Chemicals’ urea plant and distribution business in Babrala, Uttar Pradesh, India, for $400 million.  “Our growth in India can be further accelerated with this acquisition, creating a larger market footprint for Yara and enabling increased premium product sales in particular,” said Terje Knutsen, senior vice president and head of Yara Crop Nutrition.

Operating in the country since the 1990s, Yara has focused in recent years on premium product sales in the West and South which it said had delivered strong volume growth and margins well above its average for the region. Svein Tore Holsether, Yara’s president and CEO, added that India has strong population growth and increasing living standards, and significant potential to improve agricultural productivity.

The production plant has an annual capacity of 700,000 t ammonia and 1.2 million t urea, generating revenues and EBITDA of $350 million and $35 million respectively in the fiscal year ended Mar. 31 2016.

According to reports in the Indian press, Tata Chemicals has been trying to exit the business for nearly two years because of delayed subsidy payments. The Indian company said the divestment was in line with its strategy to continue strengthening the fertilizer business by partnerships and/or transferring ownership to world-class companies. It added that the urea business would now have the benefit of Yara’s international network and global expertise.

The Mumbai-headquartered firm will continue to own the brands Paras, TKS and Daksha. In addition, the sale does not include specialty products and complex fertilizers. Proceeds will be invested in other of the company’s growing businesses, Tata Chemicals’ managing director Ramakrishnan Mukundan said.

The transaction is subject to regulatory approvals and sanctions by the relevant courts in India, which is expected to take 9-12 months.