Mallya keeps MCF suitors waiting

Several meetings between the trio have not yielded results as Mallya seems to have changed his mind

Chairman Vijay Mallya appears to have changed his mind on divesting his controlling stake in Mangalore Chemicals & Fertilisers, one of the last jewels left in his crown.

This has irked “dear friend” Saroj Poddar, who has a little over 16 per cent of the equity and intended to acquire majority stake. Another suitor from Pune, Deepak Fertilisers, is also miffed with Mallya — several meetings with the liquor baron have not taken things forward.

Poddar, in an earlier interaction with Business Standard, had said he was confident the deal would be concluded by the first week of September.

As things stand, none of the trio engaged in the takeover battle have been able to arrive at a solution.  Poddar told this newspaper: “It is difficult to deal with Vijay; he keeps changing his mind and delays things.”

After a surprise entry by Deepak Fertilisers, Poddar had even gone to London to meet Mallya, to ensure things went his way. Poddar also claims he has the right of first refusal over the shares of Mallya in MCF. After Deepak bought 24 per cent stake in MCF via open market buys, Poddar decided he had to act and raised his stake in MFC via two rounds of share buying from the market.

But Poddar had then made it clear that there was no point in buying any further shares from open market and Mallya would take a call on this.

Deepak Fertilisers too had several meetings with Mallya recently but it only added to the disappointment of the new chairman of Deepak Fertilisers.

“We acquired close to 25% in MCF that show that our ultimate intent is to gain control and not be content with what we currently have. Meetings have taken place but things haven’t moved an inch and we are disappointed with this sort of attitude from MCF,” a senior official of Deepak Fertilisers said, adding that company never wanted to just stay invested in MCF as portfolio investor with a substantial stake.

“In India, hostile takeovers hardly take place. This is, thus, taking time which is difficult,” he added.

Mallya has about 20% stake in MCF now. A sector analyst pointed out that given the current market situation, Mallya would not like to take any call on MCF and will delay things for sure.

“He increased his stake in MCF, though marginal. That shows his intent to not give it away to either of the suitors any time soon,” the analyst added.  

It is rare to see any excitement in fertilizers industry but MCF is a prized company because of its exponential growth in the last few years. From a company with a net worth of only Rs 194 crore in 2003-04, MCF's net worth has zoomed to almost Rs 600 crore recently. A vacant 60 acre plot in the existing facility only adds to the shine of Mallya’s jewel.