Mangalore Chemicals shareholders reject transactions with Zuari Agro Chemicals

By: | Published: September 29, 2016 6:31 AM

MCF’s shares surged on Wednesday after the company informed about outcome of the AGM. Its scrip closed at R47.40, up 6.52%.

In a surprise move, Mangalore Chemicals & Fertilizers (MCF) shareholders have rejected the company’s proposed transactions with Saroj Poddar-led Zuari Agro Chemicals, during the annual general meeting of the Karnataka-based fertiliser manufacturer.

MCF, which became a subsidiary of Zuari Agro Chemicals (ZACL) in May last year after Poddar’s Zuari Group acquired majority stake in it, sought shareholders’ approval for certain transactions, contracts and arrangements entered or to be entered into by it with ZACL for purchase or sale of goods, availing or rendering of services and transferring resources among others.

But out of the nine items, shareholders disapproved two items, including transaction with ZACL, during the AGM held on Tuesday in Bengaluru.

On Wednesday, MCF issued a clarification on BSE, stating that Zuari Fertilisers & Chemicals (ZFCL), a wholly-owed subsidiary of ZACL, abstained from the voting on this particular agenda being related party, and the resolution was not passed with the requisite majority by non-related shareholders at the AGM.

In the filing, the fertiliser maker said as per the provisions, it can enter into transactions with ZACL for an amount not exceeding R300 crore without approval of the shareholders. “During the year the company will be within the limits prescribed under the Act and Regulations, consequently it will not have any impact on the business of the company,” MCF added.

MCF’s shares surged on Wednesday after the company informed about outcome of the AGM. Its scrip closed at R47.40, up 6.52% on the Bombay Stock Exchange from the previous close.

Zuari Group now holds over 53% stake in MCF, erstwhile an UB Group company. Its shareholding increased from 16.47% to 53.03% last year after acquisition of shares through open offer launched by ZFCL in concert with ZACL.

As per the latest shareholding pattern (June, 2016), Vijay Mallya’s UB group has 21.98% stake in Mangalore Chemicals & Fertilizers. In 2014, Mallya resigned as director of MCF, which was considered one of the last crown jewels of the beleaguered liquor baron.

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