Tata Chemicals is in initial talks with the Archean Group to acquire the troubled industrial salt unit

In a deal that could value the business at Rs. 450 crore, Tata Chemicals is in initial talks with the Archean Group to acquire the troubled industrial salt unit.

The potential deal could offer a reprieve to the Chennai-based Archean which has been struggling to service its debt obligations for the last two years. Founded in 1982, it has businesses spanning from industrial salt and fertilisers to mining.

Archean has an integrated manufacturing plant at Hajipir near the Rann of Kutch, Gujarat with a production capacity of 3 million of salt. The industrial salt is used as an intermediary in the manufacturing of detergents, textile dyes, plastic products and glass.

The company uses the abundant and unique Rann brine as raw material which provides it with a cost advantage over other producers. This advantage also creates entry barriers for new market entrants.

After completion of initial negotiations, the Tata Chemicals board may discuss the potential offer this month, it is understood.

Starting in 2018, Archean has raised Rs. 840 crore through the issue of NCDs in three tranches to India Resurgence Fund, a joint venture between Bain Capital and Piramal Enterprises. It used the proceeds to refinance the erstwhile bank loans, raise working capital and fund ongoing capex for bromine expansion.