The Bombay Oil Industries Ltd (BOIL), which owns Parachute and Saffola, is entitled to terminate the registered users agreement which it has entered into with the Mariwala-owned Marico Industries Ltd in the event of the shareholding of the Mariwala Group in the company falling below 25 per cent of the paid-up capital at any point of time.

This could also be the case if the Mariwala group loses control over the company or in the event the company commits breach of payment terms, as per the agreement. The promoters' holding in Marico is 64 per cent. FIIs have a holding of 17 per cent in the company. The share capital of the company is Rs 14.5 crore. This acts as apoison pill for any takeover attempt on Marico as the main flagship brands Parachute coconut oil and Saffola belong to BOIL.

These brands are the main cash cows and contribute over 80 per cent to the turnover. Further, Marico has the first right of refusal should BOIL wish to alienate itself from the ownership of the two brands.

The company is engaged in the business of manufacture and marketing of branded personal care products, edible oils, fabric care products and processed foods. These products are sold under the brand names of Parachute, Saffola, Sweekar, Hair & Care, Revive and SIL. The brands Sweekar, Revive and Hair & Care are owned by Marico Industries.

Marico entered into a registered users agreement with BOIL for the use of the brands Parachute and Saffola for an initial period of three years commencing April 1, 1990, on payment of royalty of 0.1 per cent, 0.75 per cent and 0.5 per cent for the first, second and third years respectively on the net ex-factory sale price of the products --Parachute Coconut Oil and Saffola Refined Kardi Oil.

The agreement was initially renewed for a further period of three years expiring on March 1996 on a royalty of 0.75 per cent and has now been renewed in `perpetuity', subject to payment of royalty at the rate of 0.75 per cent of the net ex-factory sale price of the two products. No royalty is payable on any extensions of these two brands and the extensions would belong to Marico Industries.

For instance, the new extensions of Parachite, that is, Parachute Nutri-sheen and Parachute Lite belong to Marico and the company does not pay any royalty on these products.

Marico was incorporated on October 12, 1988, under the name Marico Foods Ltd. The name of the company was changed to Marico Industries Ltd with effect from October 1989.

In March 1989, BOIL agreed to provide expert services in technical, financial and managerial matters connected with the initial setting up of projects of the company in consideration of controlling the majority of thecomposition of the board of directors of the company. As a result of this agreement, the company became a subsidiary of BOIL. In April 1990, the company commenced its commercial operations by taking over the business of the consumer products division of BOIL. The company has complied with the relevant formalities in connection with the takeover of the consumer products division of BOIL.