Matix Fertilisers valued at ~21 bn
Firstland did not make any return on NuPower investments, but has done well with fertiliser firm
The Kanodia family’s Firstland Holdings, whose investment in the controversial NuPower Renewables yielded no returns, is also the holding company for Matix Fertilisers and Chemicals.
Matix, which commenced commercial operations in October 2017, is projected to earn profits of ~873.6 million in 2018-19, rising to ~6 billion by 2027-28, show valuation documents filed with the Registrar of Companies.
The documents also show that the company has been valued at ~20.92 billion. Firstland Holdings had also invested in the Deepak Kochhar-led NuPower Renewables. It held over ~3 billion worth of compulsorily convertible cumulative preference shares (CCPS) in the company.
NuPower Renewables has been in the news after allegations that it received capital in exchange for loans from ICICI Bank, headed by Deepak Kochhar’s wife Chanda Kochhar. All parties involved have denied any impropriety. Regulatory filings and source-based information show that Firstland later exited the company in favour of DH Renewables Holding without making any gains or losses.
The Matix Fertilisers investment seems to have worked out better, at least going by the valuation report. The document mentions that the West Bengal-based firm is well-connected by road, rail, seaport and airport, which will facilitate movement of capital goods, raw materials and finished goods.
“The equity value of Matix Fertilisers and Chemicals works out to ~20.92 billion,” said the report dated December 2016 by Nisar & Kumar, a chartered accountancy firm. The valuation was for a proposed equity investment of ~5 billion by Matix Agri Holdings Ltd, Mauritius.
“Under the provisions of New Investment Policy-2012 and its amendment, Matix Fertilisers and Chemicals Ltd (Matix) has set up a coal bed methane (CBM)-based greenfield ammonia-urea complex at Panagarh, West Bengal, with an installed capacity of 1.3 million metric tonnes per annum. The commercial production of Matix has started on October 1, 2017,” stated a reply in the Lok Sabha on February 2018 on urea production in the country.
There has also been an improvement in the outlook for the fertiliser sector this year.
An April 5 press statement from rating agency ICRA on the fertiliser industry noted that the overall profitability for the sector was likely to see significant improvement in 2017-18, compared to the previous year. Satyajeet Senapati, analyst, ICRA, added the demand for fertilisers in the first half of 2018-19 was likely to be stable in light of predictions of a normal monsoon, and higher farm realisation for crops.
There is also some optimism on urea prices. Higher energy prices in China have affected production in the country. This has led to hopes of better pricing in the days ahead for the sector.
“China’s urea exports, once viewed as providing something of a ceiling for world prices, have plunged from 13 million tonnes in 2015 to 4.7 million tonnes in 2016,” noted a March 7, 2018, Emkay Global Financial Services’ agri-input and chemicals sector update report authored by analysts Pratik Tholiya and Himanshu Binani.
However, credit metrics for the industry are not expected to see an upside in light of capex requirements and working capital requirements, according to ICRA.
E-mails sent to Matix and the chartered accountancy firm remained unanswered.