Tata Chemicals wants to focus on consumer businesses like Tata Salt, pulses and spices under Sampann brand and water purifier Tata Swach.
Tata group firm Tata Chemicals has announced sale of its urea business to Norway's Yara Fertilisers for Rs 2,670 crore.
Under the deal, the company will sell its only urea plant in Barbala, Uttar Pradesh, which has an annual capacity of about 1.2 million tonnes.
Following the sale, which was done to unlock value of a heavily regulated urea sector, Tata Chemicals will focus on its consumer businesses like salt (Tata Salt), pulses and spices (sold under Sampann brand) and water purifier (Tata Swach).
The deal is expected to be finalised in the next 9-12 months, subject to regulatory approval and Yara would fund this acquisition through internal accrual.
The Board approved "transfer of the business of sale and distribution of urea and customised fertilisers, manufactured by the company at its plants located in Babrala, Uttar Pradesh, by way of a slump sale to Yara Fertilisers India", Tata Chemicals said in a statement.
The urea business along with the assets, liabilities, contracts, deeds etc, would be transferred to Yara India in exchange of a lump sum consideration of Rs 2,670 crore.
Later at a press conference, Tata Chemicals MD R Mukundan said: "Broadly, this is in line with the company's strategy of building our consumer business, while we maintain our leadership in the inorganic chemical business and try to focus on farm business through Rallis and Metahelix".
The divestment of the urea business will unlock value for the company, strengthen its balance sheet and will help to pursue growth potentials and opportunities in line with its strategic directions, he said.
Tata Chemicals will continue to own the brands -- Paras, TKS and Daksha -- and the transaction does not include speciality products and complex fertilisers, he added.
Munkudan said the company has stopped all investments in its complex fertiliser plant in Haldia, West Bengal, and is looking at opportunities and suitable partners, as and when it comes.
Shares of Tata Chemicals today jumped nearly 9% after the company announced sale of its urea business. The scrip zoomed 8.77% to settle at Rs 503.60 on BSE.
During the day, it soared 10% to its 52-week high of Rs 509.30.
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