RCF may spin off Thal III project into separate unit

Rashtriya Chemicals and Fertilizers Ltd. | Fertilizers | Chemicals & Fertilizers | BSE: 524230 | NSE: RCF

07 Sep 2009 Evaluate

State-owned Rashtriya Chemicals and Fertilizers (RCF) plans to spin off the third phase of its Thal unit in Maharashtra into a separate company, as it looks to rope in a strategic partner for the Rs 4,000-crore project. Several investors have shown interest in Thal III project, according to RCF’s chairman and managing director US Jha.

It can be PE funds or an investor from the Gulf region. It is also exploring an initial public offering (IPO), as the Thal III project nears financial closure. Additional funds could also come in from the government’s proposed disinvestment plan. Additional gas supplies from the Krishna Godavari (KG) basin seem to have encouraged the company to go in for an expansion.

The phase III expansion at Thal will help RCF increase urea production capacity to 3.3 million tonne from around two lakh tonne. Currently, the Thal facility is also being revamped at an investment of Rs 500 crore that will add 2.5 lakh tonne to its existing capacity. RCF has lined up capital expenditure of around Rs 6,000 crore over the next 4-5 years to increase its urea capacity to over 4 MT. The company is in the process of reviving a sick fertiliser unit at Barauni through a joint venture with NFL & Kribhco. RCF has recently revamped its ammonia and complex fertiliser plants and is in the process of upgrading its methanol unit. The Indian fertiliser industry will see capacity addition to the tune of 5-6 MT over the next 4-5 years.

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