Tata Chem-Rallis fertiliser deal
set for split
Economic Times — April 25,
2002
The decade-old fertiliser marketing arrangement between Tata
Chemicals and Rallis India is heading for a split. Tata Chemicals,
which sells branded urea through the marketing outfits of
Rallis, is set to make its own arrangements for marketing.
Both companies have informally agreed to discontinue the
arrangement, which comes up for renewal every three years.
The move, caused by the restructuring initiatives in both
Tata Group companies, will be taken up by the respective boards
for approval shortly. Rallis, which has been the sole marketing
agency for Tata Chemicals, sells fertiliser products worth
Rs 325 crore mainly in Uttar Pradesh, Bihar and certain parts
of West Bengal, Punjab and Haryana.
A Tata group spokesperson denied the development by saying
that no such decision has been taken. Sources said officials
from both companies have been discussing the matter for the
last few days and they have agreed on a time span for separation.
An official announcement is expected shortly.
Industry sources said the move would benefit both companies
since it streamlines the operations to a large extent. Tata
Chemicals, perhaps the only domestic fertiliser company, which
does not market directly, can have better operational control.
The company produces around 8.5 lakh tonnes of urea at its
facility in Barbala, Uttar Pradesh.
It originally tied up with Rallis due to the latter's vast
marketing network. It is not clear as to how Tata Chemicals
plans to do the urea marketing. Industry sources said that
it may tap the existing dealers of Rallis. Fertiliser marketing
is no longer a major revenue earner for Rallis after it stopped
the marketing of imported fertiliser products sometime last
year.
In addition to Tata Chemical's urea product, Rallis, with
its marketing network across the country, used to market other
products including di-ammonium phosphate (DAP). Sources said
that Rallis exited from the marketing of imported fertiliser
products in an attempt to bring focus to its operations.
The company has been reducing its exposure on other imported
products. It recently called off a seed marketing arrangement
with the US major Monsanto Chemicals. Post-recast, Rallis
will focus mainly on pesticides and is diversifying into new-age
businesses such as biotechnology.
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