Swc Consumer Division Sale Contested

Shaw Wallace & Co's bid to sell off its consumer products division (CPD) has taken a new turn with a minority shareholder of Calcutta Chemical Company (Calchem), Krishna Das Paul claiming that the entire deal for Calchem has been structured to show a lesser realisation against equity and cumulative shares.

Total realisation against transfer of equity and cumulative preference shares comes to Rs 11.82 crore in the deal with Henkel while the offer of Rs 300 per share made by Paul will add up to Rs 39 crore thereby ensuring a better deal for minority shareholders. The total sale consideration agreed upon is Rs 51.05 crore, and it includes the sale of SWC's stake in both Calcutta Chemical Co and Detergents India Ltd. The deal has been finalised between Shaw Wallace and Henkel Spic India Ltd.

Paul points out that items III, IV and V under Group A in the tender bid of assets relate to the sale of Aramusk brand where the Henkel bid is Rs 17 lakh. The distribution agreement, valued at Rs 17. 73 crore and non-competition agreement, where the consideration money is Rs 9.28 crore, are not recognisable.

"How can distribution rights or non-competition rights be sold ? They are contracts and not assets," questions Paul. However, sources close to SWC warn that the deal involving sale of CPD for a total consideration of Rs 51.05 crore must be seen in its entirety.

"SWC, being the majority stake holder in Calcutta Chemicals and Detergents India Ltd is at liberty to put up its stake in both for sale as a package deal. The original tender includes the sale of both as a package. Obviously, offers for individual companies will not be entertained," a source said.

According to a source, the sale of the consumer products business in essence means sale of ownership coupled with a whole lot of other factors such as brand awareness and goodwill along with distribution rights and non-competition agreement. SWC sources question why Paul did not bid for the SWC stake in the company when the tender was floated despite having bought the tender document last year.

Paul also questions the fact whether SWC is within its rights to transfer the distribution rights to Henkel Spic.

"It is the privilege of Calcutta Chemical Company as a whole to appoint a distributor for its products and not that of majority stakeholder," points out Paul.

Paul has already submitted his offer to the Company Law Board which heard the case for three days from August 24. The hearing was inconclusive, and the next date of hearing has been fixed for September 14.

Meanwhile, the liquor major's hearing at the Calcutta High Court on the proposed creditor repayment scheme held on Tuesday remained inconclusive. The next hearing will take place on Wednesday.