Tata Chemicals has informed the Bombay Stock Exchange (BSE) on August 10, 2016 that it has decided to sell its urea business to Yara India for $400 million (Rs 2670 crore).

The company in the statement said, “Tata Chemicals Board of Directors considered and accepted the recommendations of the Committee of Directors as well as the Audit Committee, for the transfer of the business of sale and distribution of Urea and customized fertilisers, manufactured by the Company at its plants located in Babrala, Uttar Pradesh  (“Urea Business”), by way of a slump sale  by the Company to Yara Fertilisers India Private Limited (“Yara India”) pursuant to a scheme of arrangement (“Scheme”) approved by the Board subject to all requisite regulatory and other approvals and sanction by the High Court/ National Company Law Tribunal (NCLT) in the manner agreed by the Company and Yara.”

Tata Chemicals Board of Directors also approved the execution of definitive agreements between the Company, Yara India, and Yara  International ASA (“Yara”) regarding the sale and transfer of the Urea Business from the Company to Yara India pursuant to the Scheme subject to satisfaction of conditions precedent including the Scheme being effective and all regulatory and other approvals as may be required.

“The Urea Business along with the assets, liabilities, contracts, deeds etc., shall be transferred and vested with Yara India pursuant to the Scheme becoming effective on a slump sale basis i.e., in exchange of a lump sum consideration to be paid by Yara India to the Company, on the terms and conditions as agreed between by the Company and Yara,” the statement adds.

Speaking on the development, R. Mukundan MD, Tata Chemicals commented that this marks a decisive  move  on  the  part  of  the  company  to  move  forward  on  its  strategy  to  build focusing the farm business through its subsidiary Rallis and Metahelix. The company is pleased to have found a strong partner to parent its Urea business.

However, Tata Chemicals will continue to own the brands Paras, TKS and Daksha.  This transaction does not include specialty products and complex fertilisers.

The company statement said, “This process of divestment by Tata Chemicals Limited is in line with the strategic direction of the company to continue to strengthen the Fertiliser businesses by partnerships and/or transfer of ownership to world class companies. The Urea business will now have the benefit of International network of Yara and its global expertise.”

The lump sum consideration for the transfer of the Urea Business of the Company by way of a slump sale pursuant to the Scheme is Rs 2670 Cr, subject to certain adjustments after closing,  as  agreed  between the  parties  in  terms  of  the  definitive  agreements  and  the Scheme.

Acoording to media reports,  Indian Farmers Fertiliser Cooperative (IFFCO) and Deepak Fertilizers are among those in talks with Tata Chemicals for its fertiliser business.

Tata Chemicals was quoting around $750 million (Rs 5000 crore) last time, and had to call off the process as no buyer was willing to pay that much.