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Deepak Fertilisers picks up 49% stake in Desai Fruits

BS Reporter  |  Mumbai/ Ahmedabad 

Diversified fertilisers player, Corporation Ltd has acquired 49 per cent equity stake, with management control in Navsari-based Pvt Ltd (DFV) for a total of Rs 60.77 crore. As per the deal, Deepak Fertilisers will invest Rs 60.77 crore through fresh issue of equity shares to be paid for over the next 30 months, the company informed in a statement filed with the Bombay Stock Exchange (BSE).

The investment by Deepak Fertilisers would lead to a dilution of the existing holdings of European strategic investor consortium as well as the Indian promoters. The deal values the firm at Rs 124 crore. The current market value of the facilities and infrastructure of DFV is close to Rs 24 crores.

"The valuation of the deal is based on our future business strategy and on estimates of future cash flows. We perceive DFV to be an ideal turnaround case, and see immense potential in this deal going forward. DFPCL brings with it robust management skills along with expertise in supply chain management and marketing and at linkages with farmers and farm inputs," a DFV spokesperson informed.

DFV has a strong farmer base with a harvest potential of about 100,000 MT per annum. DFV is India’s largest exporter of bananas with annual exports of close to 10,000 MT, which equals to 20 per cent of India’s banana exports.

A consortium of Swiss investors through AG held majority stake in DFV, which was originally founded by Ajit Desai chairman and managing director of the company. Desai is currently a minority shareholder in the firm.

DFV is one of the leading agro-processing major having a wide range of tropical fruits and vegetables. "We plan to reinforce infrastructure considerably. We will invest in building pack houses for primary processing and packaging of fresh produce and to build state-of-the-art ripening chambers which provide safe and hygienic fresh produce for consumption. We have envisaged a capex of about Rs 25 crores over the next 2 to 3 years," the spokesperson said.

Currently, the company would continue focusing on bananas, thereafter, it would propose to expand to other fresh produce i.e. fruits and vegetables. The deal is believed to extend the scope of Deepak Fertilisers' agriculture business, which includes nutrients and fertilizers.

First Published: Wed, November 16 2011. 00:17 IST