Tata’s Babrala Urea Unit Brought By Yara Fertilizers In 2682 Crore, ‘First FDI in Highly Regulated Urea Sector'
Tata chemicals Babrala Urea Plant has been acquired by Norway based International Fertilizer Giant Yara. It was a huge deal of Rs 2682 Crore, which may possibly open the floodgates to FDI in highly regulated sectors like Urea.
We will concentrate on the need of farmer that will give us space to make a concrete stand in the region, said Svein Tore Holsether, President, Yara International ASA (Yara) in an answer to BW Businessworld’s question of their trade philosophy in difficult market of India. It is the world’s leading supplier of mineral fertilizers, which earlier today had announced the successful completion of its acquisition of the Tata Chemicals’ urea business. The deal included the transfer of all assets and liabilities (working capital) relating to the Babrala plant in Uttar Pradesh. It is the first foreign direct investment in the highly regulated urea sector.
Svein continued, “We are pleased to announce the completion of the acquisition of the Tata Chemicals’ urea business. It represents a major step forward for us, as we deepen our footprint in the world’s second-largest fertilizer market. The Indian agricultural sector has enormous potential, which will also benefit the overall economic growth in India. We are now welcoming the opportunity to contribute with our knowledge and solutions to improve the lives of farmers in India”.
With this acquisition, Yara gains a significant position in the Northern region, with access to a strong network of 650-700 dealers. It will enable the company to provide enhanced crop nutrition solutions to farmers in North India which has 31 million hectares (Ha) of grain and 4 million Ha of horticulture crops. As per Yara’s assessment, it’s turnover which is currently around USD 40 Mn in India will increase to USD 350 Mn.
“Yara has operations in 60 countries and sales to 160 countries worldwide. This has given Yara a deep understanding and knowledge of crop nutrition under varied soil and climatic conditions. We believe the Indian agricultural sector can become more productive by improving fertilizer application practices. Our experience has shown that working closely with the Indian farmer to ensure that the benefits of balanced crop nutrition are clearly demonstrated, has helped growers to improve their yields and increase their profitability,” said Terje Knutsen, EVP Crop Nutrition.
Terje shared his market insights of South Asia with BW Businessworld and accepted that it is such a rich and versatile demography that it becomes difficult to operate here. He has also shared their postman system which enables them to get personal connectivity with regional farmers.
The Babrala plant was commissioned in 1994, and is the most energy efficient plant in India, with energy efficiency on par with Yara’s best plants across the globe. The acquired plant has an annual production of 0.7 million tonnes ammonia and 1.2 million tonnes urea. It has generated revenues and Profit Before Tax of USD 296 million and USD 29 million respectively in the financial year ended this march. The urea produced is allocated for the states of Uttar Pradesh, Uttarakhand, Bihar, West Bengal, Punjab and Haryana and will be marketed under Yara’s global brand name for it’s premium urea products –‘YaraVera’.
Expressing views on the occasion, Narasimha Rao, CEO and President, Yara India said, “Prime Minister Narendra Modi has announced an impressive target of doubling farmer’s income by 2022 and Yara is committed to supporting this mission.
In 2017, the Yara teams across the country impacted over 200,000 farmers in the Indian countryside. In addition to urea, farmers in the northern belt will now have access to Yara’s differentiated portfolio of fertilizer products. Our crop nutrition solution will include our tools and services to share our knowledge on optimizing yield and quality, for instance, a comprehensive range of analytical services including soil testing in a world-class laboratory at Babrala. Yara also offers digital tools like Yara CheckIT which enables growers to diagnose nutrient deficiencies in crops,” Rao added.
