MCF shares up as minority shareholders reject transactions with Zuari Agro

Zuari Group chairman Saroj Poddar clarifies it is insignificant, does not impact company

Shares of Zuari Fertilisers controlled Mangalore Chemicals and Fertilisers jumped 17 per cent in intraday trading on Wednesday after minority shareholders rejected a transaction with Zuari Agro Chemicals at the company's annual general meeting.

MCF had disclosed in a regulatory that its minority shareholders had rejected appointment of V S Venkataraman, a loyalist of liquor baron Vijay Mallya on the company's board as well as the transaction with group firm Zuari Agro Chemicals at the AGM on Tuesday. Venkataraman was an additional director at MCF since October 19, 2015.

Saroj Poddar owned Zuari Fertilisers which owns 53 per cent stake in MCF did not vote.

"It is of no significance. It is business as usual for the company. Minority shareholders voted against but it will not impact the company in any way," said Saroj Kumar Poddar, chairman of Zuari Group in a telephonic interview.

MCF was once controlled by Mallya, who had to sell his shares in the fertiliser maker to Poddar after his venture into aviation with Kingfisher Airlines failed. He also lost his liquor empire he built as India's largest to global rivals - United Spirits to British liquor major Diageo and United Breweries to Dutch beer maker Heineken.

In 2013, Poddar bought Mallya's stake that was on block by banks taken as security for loans given to the defunct Kingfisher Airlines. Since then, he has increased it to 53 per cent through an open offer.

Vijay Mallya, now under self exile in the United Kingdom,  through his Kingfisher Finvest, McDowell Holdings and United Breweries Holdings now holds around 21.98 per cent.

MCF in its regulatory filings claimed that since the  value of the transactions with ZACL in 2015-16 exceeded 10 per cent of the annual turnover of the company, the approval of the members was sought for the transactions entered with ZACL.

All the transactions proposed were in the ordinary course of business; hence, it is not going to impact the company and its financials in any manner, it said.

In May, MCF said it may take legal action against Mallya after its auditors found there could be "irregularities and elements of mismanagement" in the Rs 200 crore investment made by the company in Bangalore Beverages Ltd.

MCF had invested Rs  200 crore in preferential shares in the Bengaluru beer maker during Mallya's regime before he sold majority stake to Saroj Poddar owned Zuari. MCF found that there could be fraud after its auditors Ernst and Young LLP did a forensic investigation into the deal. E&Y also found the same with Rs 16.68 crore lent to United Breweries (Holdings) Ltd, majority owned by Mallya, MCF said.