CDC to acquire industrial chemicals business of ICI India

Mumbai:
26 December 2003

The company''s industrial chemical business consists of the nitro-cellulose business including a trading division. These entities will be demerged into a separate company. Under the agreement, CDC will pay an upfront amount of Rs 62.3 crore while a further Rs 12.7 crore will be paid in three instalments.

While the deal is in line with ICI India''s oft-stated policy of concentrating on its core businesses of speciality chemicals and paints this marks the exit of yet another business from the company''s once impressive portfolio of businesses.

ICI India acquired the Gujarat-based Asha Nitrochem for a reported Rs 16 crore in 1998. The acquisition helped the company achieve near monopolistic status in the nitro-cellulose market with a share of above 70 per cent.

Sources in the company say though ICI India invested some amount in upgrading the Gujarat-based plant it was minuscule against the profits that accrued to it because of the monopolistic nature of the business. The nitro-cellulose business registered a growth of 10 per cent in the last financial year and accounts for 15 per cent of the total turnover of ICI India.

The sources say sales of the division were around Rs 90 crore in the last financial year and its average operating profit over a three period was in the region of Rs 15 crore.

Earlier speculation was rife about CDC acquiring ICI India''s twin regional businesses of rubber chemicals and nitro-cellulose in a package deal. However, with nitro-cellulose being sold off, ICI India remains saddled with its loss making rubber chemicals division. Margins from its rubber chemicals business have been under pressure due to a decline in global prices and appreciation of the rupee against the dollar. Increased competition from imports has also pulled down sales.