Murugappa group decides to consolidated its fertiliser business

The over $2-billion Murugappa group has decided to consolidated its fertiliser business by merging Godavari Fertilisers and Chemicals Ltd (GFCL) with Coromandel International Limited. Following the merger, the combined entity will become the largest producer of phosphatic fertiliser in the country after Indian Farmers Fertiliser Co-operative Ltd (Iffco) with a combined turnover of over Rs 4,000 crore with a market share of around 20%.

The companies have called for a board meeting on Tuesday to seek approval of the members. The boards of directors of the two companies are expected to decide on appointing independent valuers soon to arrive at a share swap ratio for smooth merger.

Coromandel, which acquired the entire 25% stake of Iffco in GFCL in January this year, was able to garner 4.85% shares following its open offer in February, thus increasing its total stake in GFCL to 74.92%.

When contacted, Coromandel chairman and Murugappa group vice-chairman and director (strategic) A Vellayan said, “”Both the companies have a lot of synergies. The combined entity would become the second largest manufacturer of phosphatic fertilisers in India after Iffco and would have a combined turnover of more than Rs 4,000 crore.””

He said the areas of synergies include raw material processes, geographical presence, combined marketing strength, a wide range of products, including high-end and low-end phosphatic products and sulphur, easy penetration in deep pockets of Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra and Orissa. “”The synergy will help widen the group’s retail market presence in a big way,”” he added.

Coromandel has an annual capacity of 1.3 million tonne (mt) while GFCL has 1.1 mt capacity. GFCL had announced a 4-lakh-tonne expansion plans at its plant in Kakinada with an estimated investment of Rs 100 crore.