December 06, 2006
NEVIN JOHN MUMBAI
The Economic Times India
The Tata group is reportedly close to buying a 26% stake in the Nagarjuna group’s Rs 4,000-crore oil refinery project for about Rs 400 crore.
The group is in advanced stages of investing in the six-million-tonne refinery project – with an equity base of about Rs 1,500 crore – coming up in Cuddalore, Tamil Nadu, a company official told ET. The move is aimed at increasing the salt-to-software group’s presence in the oil sector.
“The group is also in talks with some Russian and Middle East companies for funding the remaining equity portion of the project”, the official added. A Tata group spokesperson declined to comment on the issue. An email sent to Nagarjuna Oil Corporation MD S Rammohan remained unanswered.
But the senior official, speaking on condition of anonymity, said the deal will be announced soon. He also added that the project’s debt of about Rs 3,000 crore is also likely to be tied up quickly. The Nagarjuna group will hold majority stake of 51% in the venture. It’s for the first time the Tatas have shown interest in oil refining, though it is present in upstream business through Tata Petrodyne, which is actively acquiring oil and gas assets in the country.
“For Nagarjuna, the deal will unlock more value. Nagarjuna’s plan is to sell 49% of its equity in the refinery project,” the official added. “The refinery project is financially attractive and would get premium from investors. The total project is Rs 4,000 crore and NFCL has invested more than Rs 600 crore in the project,” said sources. Nagarjuna Oil Corporation, a subsidiary of Nagarjuna Fertilisers and Chemicals, is setting up the project.