This is not a takeover battle, says UB Group

The acquisition of shares will not affect the control of Vijay Mallya in the company immediately

Deepak Fertilisers and Petrochemicals Corp’s acquisition of a 24.46 per cent stake in the UB Group-controlled Mangalore Chemicals and Fertilizers Ltd (MCF) from the open market has “surprised” the group led by liquor baron Vijay Mallya. However, it tried to play down the development.

“There is no takeover battle for MCF. The UB Group will retain its control over MCF,” a group spokesperson said today.

Sources added today’s share purchase would not affect Mallya’s control over the MFC immediately.

In today’s block deal, Guardian Advisors, promoted by the Burman family that owns Dabur, sold majority of its shares in MCF. Guardian had held a 10.01 per cent stake in the fertiliser company. Guardian built up its portfolio in MCF over the last two years.

Chennai-based investment company Indian Syntans Investments also sold its shares to Deepak Fertilisers. It was one of the long-time shareholders in MCF.  “It’s a deal that does not involve the promoters. The promoter has not sold his shares and continues to hold a 22 per cent stake in the company. It’s a third-party sale and does not impact the promoter,” an MCF insider said, requesting anonymity.

After acquiring the 10 per cent stake of Zuari Agro in April this year, Mallya was the single largest shareholder MCF. After today’s transaction by Deepak Fertiliser, UB Group has become the second largest shareholder.

Of the 22 per cent stake held by the promoter, United Breweries Holdings has 16.07 per cent, United Spirits 0.01 per cent and McDowell Holdings controls 4.92 per cent, while the remaining 1.01 per cent is with Kingfisher Finvest India. Mallya had pledged 57.38 per cent of the 22 per cent stake.

“It’s a surprise for me when I learnt that Deepak Fertilisers has taken a significant shareholding in MCF. Deepak Fertilisers is a respected name in the industry. I haven’t yet thought of whether I will stay further. It’s too early and I will have to understand on how today’s development will roll out,” said Deepak Anand, managing director, MCF.

Attempt to take over MCF by the competitors is not a new development. Earlier, the Chennai-based SPIC had tried to take over the company, but it was not successful. The company’s employees and trade unions had strongly opposed the move.

Taking control of MCF will be a big advantage for Deepak Fertilisers since MCF is the largest manufacturer of chemical fertiliser in Karnataka and meets 70 per cent of the fertiliser needs of the state. The balance 30 per cent is sold in neighbouring Tamil Nadu and Andhra Pradesh.

MCF reported a 21.5 per cent decline in net profit at Rs 16.8 crore for the quarter ended March 31, compared to Rs 21.5 crore a year ago. Net sales during the quarter were down 36 per cent to Rs 649.8 crore against Rs 1,014.7 crore in the year-ago period.