The board of directors of Zuari Agrochemicals Ltd (ZACL), at its meeting held on Tuesday approved the sale of its fertilizer plant at Goa and the associated businesses by way of a slump sale to Paradeep Phosphates Ltd. (PPL) for a lump sum consideration (enterprise value) of $ 280 million.

The Goa plant of ZACL is engaged in the manufacture, distribution, imports and sale of Urea, DAP and various grades of NPK fertilizers under the “Jai kisaan” brand, with a total installed capacity of 1.2million MT per annum.

“The divestment of the Goa plant by ZACL marks a strategic choice by the company, aimed at consolidating the bulk fertilizer business and achieving a significant reduction of leverage of the company,” ZACL said in a statement.

The unique products of ZACL-Goa and its distribution strength in key states of western India will render positive synergies to PPL and will give the combined entity an inherent competitive advantage, it said.

“With this restructuring move, the company now has clearly earmarked venture into specialty nutrients and retail through its wholly owned subsidiary” ZuariFarmHub Ltd “(ZFHL) and the bulk business of Goa plant and Paradeep operations consolidated under its joint venture,” Paradeep Phosphates Ltd . ” (PPL), ”it said.

This apart, the company continues to own 53% shareholding in the South India-focused company Mangalore Chemicals & Fertilizers Ltd (MCFL). Going forward, the company intends to focus a dual strategy of growing the bulk fertilizer businessthrough PPL & MCFL and the speciality business through ZFHL, it said.

PPL and ZACL will shortly be signing the definitive Business Transfer Agreement (BTA) with regard to this transaction.

The lump sum consideration, based on an enterprise value of $ 280 million, is subject to certain adjustments as agreed between the parties in the BTA.

The BTA will be subject to various statutory and regulatory approvals, it said.

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