Orica mulls options after ICI India offers to sell IEL stake

05 February 2003 01:50  [Source: ICIS news]

SINGAPORE (CNI)--Explosives, chemical and fertiliser major Orica is considering its options following ICI India's decision to exercise a put option to sell its 51% equity stake in Indian Explosives Ltd (EPL) to its Australian joint venture partner, an Orica spokesman told CNI on Wednesday.

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 49% shareholder Orica to buy its majority holding in IEL.

"In relation to the put option, Orica is considering its position," the spokesman said.

The offer follows a legal row between the two partners after Orica filed a suit in the Bombay High Court during the last quarter of 2002 pleading for the modification of the shareholders agreement between the two companies regarding the management of their joint venture.

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.

Orica would only confirm that it had lodged legal proceedings against ICI India relating to various matters.

ICI India formed a 51:49 joint venture with Orica for its explosives business in June 1999. 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 the 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.  

By: James Dallmeyer
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