Deepak Fertilisers seeks MCFL directors' support on open offer

The company has said in the offer that rival bidder Zuari's win will help 'wilful defaulter' Mallya continue to head the firm

In a bid to take control of the Vijay Mallaya's fertiliser firm MCFL, Deepak Fertilisers has sought support from MCFL's independent directors on its open offer saying that rival bidder Zuari's win will help "wilful defaulter" Mallya continue to head the firm.

Deepak Feriliser in the letter has said if Zuari's open offer succeeds then Mallya a 'wilful defaulter' will continue to be the chairman of the MCFL for five years and therefore it will be difficult for the company to access capital markets and avail loans.

The two-way battle between Deepak Fertilisers and Zuari Group for control of MCFL is further intensified. After both Deepak Fertilisers and Zuari Group have raised their open offers for acquisition of additional 26 per cent stake to Rs 288.41 crore and Rs 251.44 crore respectively.

Meanwhile, beleaguered carrier Kingfisher Airlines yesterday said it has secured a stay from the Calcutta High Court on United Bank of India declaring the airline and its directors, including promoter Vijay Mallya, as wilful defaulters.

As per the SEBI regulations, the Board of Directors of the targeted company (MCFL) need to constitute a committee of independent directors to provide "reasoned recommendations" on the open offers.

The letter added that as per public statement of the Zuari open offer and an agreement entered between Adventz Group and UB Group, both have agreed that Mallya, who has been declared a 'wilful defaulter' by the Union Bank of India, will continue as Chairman of the company at least for five years.

"A 'Wilful Defaulter' will be able to perpetuate control over the company," the letter added.

It also pointed out that under him the company will find it extremely difficult to access capital markets.

Quoting the RBI circular on wilful defaulters, the letter said, "...In order to prevent access to the capital markets by the wilful defaulters, a copy of the wilful defaulters (non-suit) and list of wilful defaulters (suit filed by accounts) are forwarded to SEBI by the RBI and Credit Information Bureau (India) Ltd respectively."

Consequently, the company will find it extremely difficult to access capital markets, the letter added.

The same circular of RBI also provides that no additional facilities should be granted by any bank or financial institution to the listed wilful defaulters, it added.

The letter has been written on behalf of Deepak Fertilisers and Petrochemicals Ltd (DFPCL) by its subsidiary SCM Solifert's Director Somnath Patil, who is also CFO of DFPCL.

It has been addressed to MCFL's Managing Director Deepak Anand, Whole Time Director Prabhakar Rao Kanthavara and to two Independent Directors Pratap Narayan and Srinivasulu Reddy Magunta.