Centre plans to invite fresh bids for NFL by month-end

NEW DELHI: The divestment of government stake in fertiliser major National Fertilisers (NFL), which has been hanging fire since ’00, is set to gather steam with the government planning to invite fresh EOIs (expression of interests) to accommodate new bidders, mainly the fertiliser co-operatives Kribhco and Iffco.
The EOIs are expected by this month-end. The financial bids are expected to be invited soon after. According to government sources, all issues regarding the NFL disinvestment, including the proposed shareholders’ agreement, have been already worked out.
``The disinvestment process is expected to be over this fiscal itself,’’ sources told ET.
Sources said the boards of Kribhco and Iffco are meeting this month to finalise their bidding strategies, mainly to decide on whether to make a joint bid or go separately.
While Iffco is learnt to be more keen on making an independent bid, the other fertiliser co-operative, Kribhco, seems to be more inclined on a joint bid with Iffco. ``We will take a final decision on our bidding strategies by this month,’’ said a source at Iffco.
Tata Chemicals, Chambal Fertilisers and Chemicals, Indo Gulf and Oswal Chemicals and Fertilisers had already given their expression of interest to buy government’s 51% equity stake in NFL.
Sources said the entry of Iffco and Kribhco will hot up the competition for NFL, forcing the companies which are already in the race to rework their valuations for the PSU major.
The two co-operative majors are also learnt to be preparing for due diligence of NFL once the government finalises the modalities for their entry into bidding.
``We will soon send a team of our technical advisors to conduct the due diligence once we submit the expression of interest for NFL,’’ added the executive at Iffco.
Meanwhile, there has been substantial reduction in losses for NFL on account of the long-term fertiliser policy. Sources say that according to the revised long-term fertiliser policy, NFL stands to lose around Rs 60 crore per annum against the earlier Rs 175 crore per annum loss.
Moreover, NFL stands to gain around Rs 400 crore on account of the government’s VIIth and VIIIth pricing policies.
Analysts say that a reduction in the loss on account of long-term policy will result in an increase in valuation of NFL. ``Attractiveness of NFL increases due to this loss reduction. This would enable the government to fetch a better price for the PSU fertiliser company,’’ an analyst said.
NFL is the second largest urea producing fertiliser company with a total urea production of 32 lakh tonnes and the government has put its 51% in the profit-making NFL on disinvestment block.