Time to consolidate for Zuari Agro Chemicals

Zuari Agro Chemicals (ZACL) is going to merge its three wholly owned subsidiaries  Zuari Fertilisers and Chemicals (ZFCL), Zuari Rotem Speciality Fertilisers (ZRSFL) and Zuari Agri Sciences (ZASL) with the company by the scheme of amalgamation. The approval has been finalised in the  board meeting of the company held on December, 29. The scheme of amalgamation as a whole will benefit  all of its stakeholders.

ZACL is in the manufacture, sale and trading of fertilizers and seeds. The company is also an importer of fertilizers and farm nutrients. It produces fertilizers of various grades along with seeds, pesticides, micro nutrients and specialty fertilizers. ZACL has a manufacturing facility at Goa. This  facility consists of four separate plants, such as ammonia, urea, nitrogen, phosphorous and potassium (NPK) A and NPK B. It has about 3300 dealers and 11000 sub dealers that market various brands of fertilizer and other agri-inputs.

ZFCL operates a single super phosphate manufacturing facility at Mahad, Maharashtra with a manufacturing capacity of 600 metric tonnes per day. ZRSFL operates a water soluble fertiliser manufacturing capacity of 24000 metric tonnes per day at Baramati, Maharashtra. ZASL is in production and trading of hybrid seeds.

The ZACL merger would simplify the group structure and achieve synergies in operations. The company will be able to achieve economies of scale and efficiency. The amalgamation also seeks to reduce operational cost, overheads and administrative and other expense.

The single entity would result in the business activities to be carried out with greater focus and specialisation. This will lead to sustainable growth. The merger will enable existing shareholders of ZACL to get direct participation in the business of the wholly owned subsidiaries.

ZACL as a consolidated company will provide all agri-inputs to the farmers of all four companies which would cater better to the marketability of these products. This should help farmers to enhance their productivity.

The share price of ZACL increased by 5.86 per cent on bourses in early trades and is trading at Rs 164 on intraday basis. The share price of the company has shown a declining trend from its 52 week high at Rs 292.7 during last one year. The fertilizers industry is not performing well due to a drought like situation and poor demand for the last one and half year.