Tata Chemicals is seeking Kotak Mahindra’s help to sell off its fertiliser business

In a bid to trim debt and focus on the high-growth consumer and industrial chemicals business, Tata Group Chairman Cyrus Mistry is mulling to sell off the fertiliser business for $1 billion, housed in Tata Chemicals.

For this, Tata Chemicals has sought Kotak Mahindra Bank’s help to find strategic buyers for the business.

One of the persons familiar with the development told Economic Times that several domestic and global majors like Deepak Fertilisers, Aditya Birla Nuvo and Morocco's OCP have been informed about the possible sale of the fertiliser unit.
However, none of them commented on the matter.

Responding to questions from ET, a Deepak Fertilisers spokesperson said, "We are closely evaluating all growth opportunities in this sector. In view of certain confidentiality constraints we are unable to react to your specific queries."

"Tata Chemicals' current valuation is around two times its book value and 18 times its earnings, although most fertiliser companies are valued at one time book value. Out of TCL's market value, around Rs 3,000 crore is attributable towards fertilisers. The recent Zuari-Mangalore Chemicals deal shows that even for loss-making, problematic units, buyers are ready to pay 2x market value or book value for ownership rights. So Tata Chemicals' fertiliser business should fetch Rs 6,000 crore," Gaurav Parikh, managing director of Jeena Scriptech Alpha Advisors, a Mumbai-based investment consultant, told the financial daily.

Tata Chemicals owns one of the most energy-efficient urea units in the country at Babrala, Uttar Pradesh, apart from a phosphatic fertiliser unit in West Bengal.