Mumbai: Hyderabad-based Nagarjuna Fertilizers and Chemicals expects to achieve financial closure for its $2.5-billion petrochemicals and fertiliser projects in Nigeria in the current fiscal, a top official said on Thursday.
“It would be a combination of debt and equity,” R.S. Nanda, senior advisor to company management told Reuters in a telephone interview.
“We are in the process of finalising the GSPA (Gas Sale and Purchase Agreement)... that should be over sometime in the next month... the final signing is yet to take place,” said Nanda, who was earlier the chief operating officer of the company.
The company expects to complete the project in 2015, he said.
Availability of natural gas at cheap rates has prompted Indian fertiliser makers to set up plants in Africa.
State-run Rashtriya Chemicals and Fertilisers is setting up a $1.5 billion urea unit in Ghana while it is exploring possibilities to set up a fertiliser manufacturing facility in Mozambique.
Tata Chemicals is investing $290 million to buy a 25% stake in its joint venture project with the government of Gabon to set up a urea manufacturing project.
“Natural gas is readily available in Nigeria and that too at a very cheap rate,” he said.
New projects, strong growth in FY12
Nagarjuna Fertilizers expects its upcoming oil refinery planned at Cuddalore in Tamil Nadu to become operational in the first half of 2012, Nanda said.
In January, the company decided to de-merge its oil business into Nagarjuna Oil Refinery Ltd and is investing about Rs 700 crore to set up the refinery.
The fertiliser maker, which reported a 17% sales growth in April-June, saw a slight dip in net profit following a shutdown at its Kakinada plant in the state of Andhra Pradesh, he said.
“The plant was shut for about 20 days, because of which the production was lower by about 86,000 tonnes and there were more of traded product sales... and the margin in traded products is much lower.”
Even after a better monsoon in most of the regions in the country, fertiliser sales would be affected due to shortage of raw material, he said.
“Due to very high prices, DAP (diammonium phosphate and potash (supply) is pretty tight in the international market... Hence, growth will not be on the lines of expectations,” he said.
Nagarjuna Fertilizers however expects to report “much higher” growth in fertiliser sales as compared to the industry growth that is seen at 4-5%, he said.
Nagarjuna is setting a customised fertiliser unit at a cost of Rs 16-17 crore.
Customised fertilisers are tailor-made combination of micro nutrients like sulphur, zinc, boron added to the key items such as urea and diammonium phosphate and potash, in a proportion that suits specific crops and soil patterns.
“We expect the unit to get commissioned by end of September,” he said.
Shares of Nagarjuna Fertilizers and Chemicals, valued at Rs 1,425 crore, closed at Rs 31.95 on Thursday, down 4.05% in a weak Mumbai market.