Zuari Agro Chemicals to Sell Fertilizer Unit in Goa to Paradeep Phosphates
- 22-Jun-2020 11:00 AM
- Journalist: Timothy Greene
One of the leading fertilizer conglomerates of the Adventz Group, Zuari Agro Chemicals, has decided to sell its fertilizer plant located in Goa to its subsidiary Paradeep Phosphates Ltd. (PPL) at a consolidated remuneration of USD 280 million (about INR 2135.06 crore). Post the sell off, PPL will enter the league of Indian fertilizer giants having strong hold in both phosphates and nitrogenous fertilizers, while the revenue generated will enable Zuari Agro Chemicals to take care of its long-term liabilities. The decision has been taken after strategic evaluation of the company’s financial position in FY20. In its regulatory filing, the Zuari Agro Chemicals reported a downward shift in its liquidity position as compared to the previous fiscal due to delayed subsidy from the government and lengthening of the working capital cycle. In addition, the company had to deal with undue cash flow mismatch due to increase in raw material prices which it remained unsuccessful in passing on to the farmers. These factors further triggered delayed repayment of loans causing the company to breach their covenants. As a result, the company holds the net current liability of INR 1,506.22 crore as on March 31, 2020. The company’s net loss widened to INR 304.60 crore during the fourth quarter of 2020 compared with a loss of INR 255.17 crore in the corresponding period as of FY19, due to closure of its phosphatic manufacturing unit in Goa. On the impact of COVID-19 on its business, the company stated that its operations have not been affected as such despite issues in availability of manpower and supply chain disruptions. The company will continue to monitor the impact COVID-19 in the country’s economic conditions and uncertainties in the market conditions associated with its duration.