31 August 1998 00:00 [Source: ICB Americas]The government of India's plan to divest its stake in ICI India Ltd. for nearly 750 million rupees ($17.6 million) was approved by the Cabinet Committee on Economic Affairs on August 20. The 9.2 percent stake could be an attractive buy for ICI PLC of the UK, which already owns 50.83 percent of the subsidiary.
ICI India has a share capital of Rs 408.7 million. The company has reorganized itself during the past four years by withdrawing from fertilizers and fibers and other businesses that weakened its profitability.
The Indian government originally invested in the company to help establish its domestic industrial explosives business, according to Ravi Marphatia, an industry consultant in Bombay.
The investment lead to the formation of ICI India Ltd. Since then, industrial explosives have become well established in the country. "The government of India feels the original purpose is fulfilled, so they can divest," Mr. Marphatia says.
ICI India is concentrating on paints, specialty chemicals and explosives. The company plans to raise its sales ten-fold within 10 years by investing in new capacity. It also plans to grow by acquisitions and partnership with other Indian companies, including Asha Nitrochem Ltd., the nation's largest producer of nitrocellulose.
"With this background," Mr. Marphatia says, "it is expected that ICI PLC of the UK will buy the equity being divested by the government of India."
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.