Tata Chemicals has ruled out the merger of Rallis India with itself for the next six months but said options were open.
Mr R. Mukundan, Managing Director, Tata Chemicals, said, “I can assure that we are not considering the merger at least for the next six months. We will consider such a move or hiking the stake further if necessary at the appropriate time.”
Tata Chemicals recently emerged the single largest shareholder of Rallis India after it purchased 42,75,869 shares representing 35.68 per cent stake from its group companies entailing an investment Rs 363.44 crore. Tata Tea sold 29,38,713 shares, Tata Sons 9,00,750 shares, Tata Investment Corporation 2,79,436 shares and Ewart Investments 1,56,970 shares.
The deal follows Tata Group’s decision to consolidate the holdings of companies with similar business interest, said Mr Mukundan. Tata Chemicals will fund the Rs 363.44-crore acquisition from its internal accruals, which stand at Rs 1,200 crore.
Tata Chemicals’ debt has come down from Rs 5,800 crore in the March quarter to Rs 5,200 crore, with the rupee appreciating against the dollar.
On the benefits from the deal, Mr Mukundan said the savings would be about Rs 60-70 crore of planned investment over three years in the speciality nutrient business, while the revenue from crop nutrition and speciality product business would go up from Rs 260 crore to Rs 600 crore in two years.
“Tata Chemicals is having a strong marketing presence in the northern and eastern regions, while Rallis is strong in the western and southern States,” he said.
On the possibility of poor monsoon hitting Tata Chemicals’ business, he said there has been a delay of 15-20 days in purchase of fertilisers in the northern region, especially in Punjab and Haryana, but stocks have been suitably repositioned to other regions where the monsoon has been fairly good.
Rakesh Jhunjhunwala & PACs bought 2.03 lakh shares or 1.69 per cent in Rallis between August 7 and 10, taking their total stake to 6.31 per cent.
Tata Chemicals shares on the BSE were up two per cent at Rs 248, while Rallis India rose 0.34 per cent to Rs 747 on Friday.
Source: The Hindu Businessline