Mumbai/Calcutta, May 3: Indian Petrochemicals Corporation Limited (IPCL) is interested in buying out state-owned Gujarat Alkalies and Chemicals Limited (GACL). Sources say several other companies, including global giants, are in the fray.
Much will depend on the divestment plans of the Gujarat government and when it plans to kickstart the process, said sources. The Gujarat government holds 36.72 per cent in GACL through Gujarat Industrial Investments Corporation, Gujarat State Investment, Gujarat Mineral Development Corporation, Gujarat Industrial Development Corporation and Gujarat Maritime Board.
Gujarat State Fertilizers and Chemicals and Gujarat Industries Power Company together hold another 3 per cent in the company.
Analysts say a buyout will provide numerous synergies to IPCL. The most important is the raw material synergy as chlorine produced by GACL is the principal feedstock for the poly vinyl chloride (PVC) that IPCL manufactures.
IPCL already has a significant regular supply line of chlorine from GACL’s Vadodara plant. GACL is also the single largest producer of caustic soda in India, with a capacity of 820 tonnes per day. The company is an efficient and integrated producer. Since IPCL also produces caustic soda, it will enhance their total capacity, says analysts.
Caustic soda is an important ingredient in the paper, aluminium and soap industries.
Situated right next door to the IPCL plant in the Nandesari industrial estate, the locational synergy between the two plants cannot be overlooked, says analysts.
GACL has two units in Vadodara and Dahej. The Dahej unit comes with a 90-mw captive plant for regular and economical power supply.
According to analysts, while the enterprise value of GACL is around Rs 2,300 crore, the actual price would depend on the due diligence and valuation exercise. The RIL group company will take part in the bidding process required for such divestment.
The GACL scrip hit its 52-week high today on the Bombay Stock Exchange at Rs 229.90 and ended the day at Rs 224.60, 0.56 per cent higher than yesterday’s close amidst a volume of 5.72 lakh shares.
