Indian fertiliser firm to increase its South African investment

Indian group Coromandel Fertilisers is set to increase its stake in South Africa’s State-owned phosphate rock miner and fertiliser manufacturer Foskor. Foskor is currently 97,5% owned by State development financier, the Industrial Development Corporation (IDC), with the 2,5% balance held by Coromandel.

In April 2005, the IDC struck a business-assistance agreement (BAA) with Coromandel, giving it an initial 2,5% holding in Foskor, but entitling it to earn R300-million (US$=R6.97) to be used to buy a maximum of 16,5% of Foskor’s equity after March 31, 2008.

Speaking following the release of record IDC profits, which were buoyed, in part, by the strong change in fortunes at Foskor, IDC CEO Geoffrey Qhena said they were happy with the part being played by Coromandel, but that its contribution would still need to be measured against a set of objective criteria before any equity changed hands. He said that part of the turnaround could be attributed to efforts made by Foskor management.

Foskor, which had a positive 2005/6, reported yet more progress in 2006/7, with revenue rising 15% to R3-billion from R2,6-billion, and costs falling 13% from R744-million in the previous period, to R647-million last year. As a result, the company’s operating income surged 576% to R514-million from R76-million in the previous year.

Prior to the introduction of Coromandel, Foskor suffered significant losses of R47-million in 2003, R410-million in 2004, and R132-million in 2005. The IDC also took a fair-value adjustment of R300-million in 2005, which impacted negatively on its results.

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