ICI India invites partner Orica to buy Indian Explosives

03 February 2003 05:59  [Source: ICIS news]

NEW DELHI (CNI)--ICI India has offered to sell its 51% equity stake in Indian Explosives Ltd (IEL) to 49% stakeholder, giant Australian chemicals and explosives company Orica, following a legal row between the two partners.

According to ICI India, Orica filed a suit in the Bombay High Court during the last quarter of 2002 pleading for the modification of certain clauses in the shareholders agreement between the two companies regarding the management of their joint venture. One of these clauses deals with the valuation of IEL shares.

ICI India disclosed that Orica had also raised certain financial claims against it. However, the company did not specify what these claims were, stating only that ICI India was contesting the case in the court.

In the footnotes to its latest quarterly results, ICI India said it had decided to exercise a put option in the shareholders agreement, calling on Orica to buy its 51% holding in IEL.

ICI India was not part of the deal when Orica took over ICI's explosives business for $370m in the Americas and Europe in May 1998 as the Australian company embarked on a spending spree to transform itself into the world's largest civil and mining explosives company.

In June 1999, ICI India formed a 51:49 joint venture with Orica for its explosives business. At the same time ICI India transferred its 70% equity stake in detonator manufacturer Initiating Explosives Systems India Ltd (IES) to IEL. The remaining 30% stake in IES continues to be with Ensign-Bickford of the US.

In September 1999, ICI India received Rs870m ($18.2m/Euro17.0m) on the completion of this transaction, booking a profit of Rs224m on the deal and reducing its borrowings.

IEL operates an explosives plant at Gomia in Jharkhand State and two other bulk emulsion explosive sites. It has the capacity to produce 160 000 tonne/year of commercial explosives. The company earned a net profit of Rs89.4m on total income of Rs1.86bn in its financial year ended 31 March 2002.

IEL’s subsidiary IES earned a net profit of Rs85.8m on total income of Rs706.6m in 2001-02.

By: Naresh Minocha
+65 6780 4359

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