Mumbai, Aug. 10: Tata Chemicals is selling its urea business to Norway-based Yara for Rs 2,670 crore.

Under the deal, the company will sell its only urea plant at Barbala in Uttar Pradesh.

The Tata group company today said the urea business along with the assets, liabilities and contracts would be transferred and vested with Yara Fertilisers India on a slump-sale basis.

A slump sale is a lump sum amount paid to the seller, without assigning any value to assets and liabilities.

Tata Chemicals said the divestment was in line with its plan to strengthen the fertiliser businesses through partnerships and/or the transfer of ownership to world-class companies. The urea business will benefit from Yara's global network and expertise.

Managing director R. Mukundan said the deal was a significant step in the company's strategy to build the consumer business, while maintaining its leadership in inorganic chemicals and focusing on the farm business through its subsidiaries Rallis and Metahelix.

The company said it would continue to own Paras, TKS and Daksha brands and the transaction with Yara did not include specialty products and complex fertilisers. The deal is expected to unlock value, strengthen the balance sheet and enable the company to pursue growth opportunities.

Observers maintain that Tata Chemicals may use part of the proceeds to trim debt. The company's gross debt stood at Rs 8,694 crore in 2015-16.

On the BSE, the Tata Chemicals scrip finished with gains of nearly 9 per cent, or Rs 40.60, to end at Rs 503.60.