 "Deepak Fertilisers moves to gain control of Mallya's MCF")
Deepak Fertilisers said in a filing to BSE on Wednesday that it, along with its subsidiary SCM Soilfort, planned to buy another 30.8 million shares of Mangalore Chemicals at Rs 61.75 apiece, amounting to Rs 190.27 crore.
It is not yet clear whether this is another hostile attempt by Deepak Fertilisers. The company had in July last year bought over 24 per cent in MCF, without Mallya's support.
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The UB group didn't comment on the issue. "We will study the offer, review our options and respond accordingly," a group executive said. (DWINDLING FORTUNES)
Zuari Agro Chemicals Chairman Saroj Poddar, who own a little more than 16 per cent in MCF, told Business Standard that he would review the open-offer proposal and take a decision in due course. Asked if there was still a chance to arrive at an arrangement with Mallya, he said: "Why not?"
Though Poddar is not ruling out a dialogue with Mallya, he had earlier said he would sell his stake to the highest bidder if he didn't get management control at MCF.
The move by Deepak Fertilisers Chairman Shailesh Mehta comes after a brief lull in his triangular fight with Poddar and Mallya for management control at Mangalore Chemicals.
Deepak Fertilisers said it had placed an order with JM Financial Services to buy up to two million shares, about 1.7 per cent, at a price not more than Rs 63 each. This makes it mandatory for the Pune-based firm to launch an open offer. "The details will be with the exchange in due course, but we are sure we will have got over 25 per cent in Mangalore Chemicals," Deepak Fertilisers Chief Financial Officer Somnath Patil told Business Standard.
If a company acquires 25 per cent or more of the shares of a listed company, it must make an open offer to buy at least another 26 per cent from shareholders. Mangalore Chemicals surged 11.70 per cent to Rs 69.20 on the BSE in morning trade after Deepak Fertilisers announced the offer. The scrip closed 6.62 per cent higher on Wednesday at Rs 66.05 - higher than Deepak's offer price.
The Deepak Fertilisers shares, too, got a positive rub-off; they jumped over eight per cent before ending the day at Rs 125.15 apiece, 4.1 per cent higher than previous close on the BSE.
Patil refused to comment on whether Deepak Fertilisers would revise its offer, since the stock price had exceeded the offered rate. But company sources suggested the offer might be revised, if required, as Deepak Fertilisers was planning to gain management control of MCF.
On July 3 last year, Deepak Fertilisers bought a 24.46 per cent stake in MCF for Rs 180 crore from the open market. Before that, in April, Poddar had acquired a 10 per cent stake. In July, Poddar had to increase his stake.
"Synergy benefits in distribution and contiguous markets make this bid lucrative. The financial incentive of being able to consolidate Mangalore Chemicals' financials is a small benefit because the Rs 190 crore it (Deepak Fertilisers) proposes to spend is less than 50 per cent of its annual cash flow," said Ravi Shenoy, assistant vice-president (Midcaps Research), Motilal Oswal Securities Ltd.
If the open offer is successful, the deal might help Deepak Fertilisers diversify by foraying into the urea business. MCF has a capacity to produce 380,000 tonnes of urea annually (it can be increased further).
Gains in the complex fertiliser business, too, can be handsome if MCF is acquired. At present, MCF has a capacity to produce about 260,000 tonnes of complex fertilisers annually, compared with Deepak Fertilisers' 180,000 tonnes. The additional capacity will not only help the Pune-based company strengthen its position in the market but widen its product range. The acquisition will also expand the company's reach to newer markets.
Also, MCF owns a 60-acre plot adjacent to its plant in Mangalore, coastal Karnataka. The company had a net profit of Rs 66.6 crore on a revenue of Rs 2,800 crore in 2012-13. For the same year, Deepak Fertilisers made a profit of Rs 146.9 crore on net sales of Rs 2,606 crore.
MCF's plant in Mangalore produces urea, diammonium phosphate, muriate of potash, granulated fertilisers, micronutrients, soil conditioners and speciality fertilisers. The company has around Rs 400 crore dues outstanding from the government as fertiliser subsidy.