Zuari Group chief Saroj Poddar and UB Group chairman Vijay Mallya are at present working on to finalise the restructuring of the board of Mangalore Chemicals and Fertilizers (MCF), and representatives from Zuari are likely to join the board soon.
It was yet to be finalised that how many representatives of Zuari would be on the MCF board. Mallya’s friend Poddar is, however, not joining the board at the moment.
“Zuari representatives will join the MCF board. Mallya will take a call on how many of our people will join the board,” a source from Zuari told FE.
“Although Mallya has resigned from the board, our pact with him will continue. Work is on to finalise the restructuring of the board of MCF. It will be finalised in a few days,” he said.
In a surprise move, Mallya has resigned as director of MCF, which was considered one of the last crown jewels of the liquor baron. The Bengaluru-based chemical fertiliser manufacturer did not cite any reason for his resignation.
The person quoted earlier, however, said the liquor baron stepped down from the board for the “best interest of MCF”. “It was his own decision because the way people were pounding on him,” he pointed out.
Mallya was under pressure to step down due to ongoing “wilful defaulter” proceedings initiated by lenders. Kolkata-headquartered United Bank of India had declared the UB Group chairman a ‘wilful defaulter’ while other lenders like State Bank of India and Punjab National Bank have issued show-cause notices, asking why they shouldn’t follow United Bank’s lead.
Although Mallya has obtained a stay from the Calcutta High Court on United Bank declaring him a wilful defaulter, UB Group’s parent company United Breweries Holdings is contesting several winding-up petitions in the Karnataka High Court and lenders have been selling pledged shares.
Analysts say Mallya’s resignation could help MCF raise working capital from the banks, when necessary, without any difficulty. They also observe that after quitting from the board, Mallya is likely to depend on his ally and friend Poddar to manage the fertiliser manufacturer, which is in the midst of an intense takeover battle.
Sources from Zuari also said Adventz Group chairman Poddar’s agreement with Mallya would still continue. According to the agreement between them during the counter-offer to Deepak Fertilizer’s open offer, the two groups will jointly control MCF and Mallya will have the right to appoint three directors on the board.
Mallya and Poddar are pitted against Pune-based Deepak Fertilisers in a takeover battle for MCF. Mallya had team up with Poddar to launch a counter bid against Deepak Fertilisers’ hostile bid to acquire a controlling interest in MCF.
Upon the conclusion of their respective open offers last month, Deepak Fertilisers has a 32% stake in the company, and Mallya and Poddar jointly own 38.4%. Mallya and Poddar have been able to retain control of MCF for the time being.