Fertilisers company Mangalore Chemicals & Fertilisers Ltd (MCFL) has announced a merger with Paradeep Phosphates Ltd (PPL) to become one of the largest integrated private sector fertiliser companies in India.
The board of directors of MCFL and PPL, at their board meetings on Wednesday evening, approved a composite scheme of arrangement for the merger of MCFL with and into PPL, marking a strategic move of consolidation for both companies.
“MCFL and PPL have consistently delivered robust financial performances and by combining, they aim to amplify shareholder value. The proposed combined entity will become one of the largest integrated private sector fertiliser companies in India, with a total manufacturing capacity of 3.6 MMTPA,” the companies told the stock exchanges.
Paradeep's shares are trading up 2.35% at ₹77.52, while MCFL stock is up 9.35% at ₹131 on the BSE today.
Once the merger deal is effective, all shareholders of MCFL will be issued shares of PPL in the ratio of 187 equity shares of PPL for every 100 equity shares of MCFL.
The new shares of PPL so issued to the shareholders of MCFL will be listed on both the National Stock Exchange of India Limited and the BSE Limited.
The joint statement says the proposed merger aims at taking their respective businesses to the next level of growth by consolidating the business operations to become a larger entity.
The merger is subject to the approval of the National Company Law Tribunal(s), shareholders and creditors of MCFL and PPL, and the Competition Commission of India.
“MCFL has a presence in the southern regions of India while PPL has a presence in the northern, central and eastern parts of India, making the proposed combined entity a pan-Indian fertiliser company,” the companies add.
MCFL is one of the largest manufacturers of chemical fertilisers in the state of Karnataka, India. PPL is also one of India's leading private players in phosphatic fertilisers.
The move is also aimed at enhancing customer engagement, improve large deal capabilities, using the manufacturing capabilities of both entities, reaping the benefits of economies of scale, and optimising supply chain.
MCFL and PPL have formed a “merger implementation committee” to oversee the merger process, including discussions with regulators, a smooth transition for employees, customers, vendors and other external stakeholders.
Suresh Krishnan, managing director & chief executive officer of PPL says, “Consolidation of PPL and MCFL will mark a significant leap forward in our growth strategy and the resultant entity will be able to cater to the diverse soil needs of the country. We will be able to reap the benefits of economies of scale, optimize product mix, enhance distribution reach and supply chain capabilities and leverage on each other potent synergies. This will result in unlocking tremendous value and drive sustainable growth for our shareholders, employees, and partners.”
Nitin Kantak, whole-time director of MCFL says: “The proposed merger will enable us to become a larger player and will help us to serve our market in a more diversified manner and will result in enhanced value creation for all the stakeholders”.
Paradeep Phosphates' Q3 FY 24 profit stood at ₹108.92 crore, down from ₹180.82 in the year-ago period. The company's revenue for the said quarter hit ₹2,595.03, a sharp decline from ₹4,398.43 crore in the year-ago period.
Mangalore Chemicals & Fertilisers Ltd's Q2 FY24 profit had dipped to ₹67.71 crore against a loss of ₹32.19 crore in the year-ago period. It's revenue was ₹1,410.41 crore in Q2 FY24 against ₹283.39 crore in the year-ago period.
