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In Hot Pursuit

Saroj Poddar has ambitious plans to make his $3 billion Adventz Group a formidable player in fertiliser and engineering businesses.
twitter-logoManu Kaushik | Print Edition: Aug 18, 2013

Saroj Kumar Poddar is not one to give up easily. In the late 1970s, he approached US-based consumer products company Gillette to set up shop in India. Convincing Gillette was a difficult task. Many large Indian industrial houses had previously failed to bring the brand to the country. There was another glitch. Indian law put several restrictions on foreign companies operating in the country. Poddar pursued the matter with the government for seven years and finally received approval in 1984.

Nearly three decades later, the 68-year-old Marwari industrialist is engaged in new battles. His unassuming personality, soft voice and a perennial smile on the face is in sharp contrast to the aggressive plans he has chalked out for his $3 billion Adventz Group.
Under Adventz, Chairman Poddar runs 23 companies across fertilisers, seeds, rail wagon manufacturing, petrochemicals, oil and gas, and infrastructure sectors. A significant part of Adventz's revenue comes from Zuari Agro Chemicals, Texmaco Rail & Engineering, and Paradeep Phosphates, the companies he inherited from his father-in-law Krishna Kumar Birla, who died in 2008.

For the past 30-odd months, Poddar has set his sight on Mangalore Chemicals and Fertilizers (MCF), a Pune-based company operated by liquor baron Vijay Mallya. In April, Poddar bought a 10 per cent stake in MCF. But he was taken for a surprise when Sailesh Mehta-led Deepak Fertilisers and Petrochemicals showed interest in MCF and bought a 24.46 per cent stake for about Rs 179 crore. Poddar upped the ante in July, buying another 6.5 per cent stake. Since April 1, the MCF stock has jumped more than 90 per cent.

Poddar says there is a lot of synergy between Zuari Agro and MCF that justifies his pursuit. "Both have similar vintage plants and operate in the same markets [Karnataka and Maharashtra]. Both companies can work in the interest of farmers."

The tussle to gain control of MCF has now reached Mallya's doorsteps. Mallya's UB Group owns about 21 per cent of MCF. Poddar says Mallya gave him the first right of refusal on his shareholding in MCF about a year ago. "If I look at just my holding alone, I am not the largest shareholder. But if I add UB Group's shareholding, then I am far ahead," he adds.

Analysts say the deal could swing either way, but Poddar is confident of his long-standing relationship with the Mallya family. "My association with Mallyas goes back to the date when Vittal Mallya (Vijay's father) was chairman of Singer India. We were colleagues on the same board," says Poddar. "Vijay is a dear friend. If he had given me a slight indication, I would have kept out of it."

Acquiring MCF is just one part of his game plan. Zuari Agro has recently modernised its Goa plant, switching from naphtha to natural gas as fuel. It has formed a joint venture with Japan's Mitsubishi Corporation to set up a Rs 4,500-crore fertiliser plant in the United Arab Emirates. This plant will produce one million metric tonnes a year by 2016. Zuari's existing capacity is 1.1 million tonnes. This venture has also acquired a stake in a Peruvian company that will supply raw material.

Zuari's takeover attempt comes after the company suffered a particularly bad year. The company's net profit dropped to Rs 64.3 crore in 2012/13 from Rs 164.4 crore the previous year, hurt by bad weather, lower availability of raw materials and the rupee's depreciation. Edelweiss Securities analysts say the company facing multiple adverse events last year was unusual and that its performance will likely improve this year.

Poddar says Vijay Mallya gave him the first right of refusal on his stake in Mangalore Chemicals about a year ago

Poddar has opened another front. Through Texmaco, a rail wagon maker, he plans to acquire Kalindee Rail Nirman (Engineers). Kalindee, based in Gurgaon, builds railway tracks and yards, and signaling and communications systems. Texmaco is the largest freight car manufacturer in the country, producing one of five wagons for Indian Railways, and the Kalindee deal will diversify its business. Poddar says Texmaco's strength lies in products while Kalindee is known for its services business. "The combined entity can offer holistic services to customers." The Kalindee board has approved issuing a 24.9 per cent stake to Texmaco on a preferential basis. Poddar also entered into a pact to buy Kalindee promoter R.D. Sharma's 15.63 per cent, which translates into 11.74 per cent after the allotment of preferential shares, in July. Texmaco has also made an open offer to acquire about 30 per cent more from public shareholders.

Poddar is not the sole suitor for Kalindee. Jaipur-based engineering company Jupiter Metal has launched an open offer priced at Rs 70 a share, higher than Texmaco's Rs 68. Kalindee shares have jumped 33 per cent in the past month on talk of a possible takeover.

The next few weeks will certainly be challenging for Poddar as he tries to seal the two deals. His strong business acumen and never-say-die attitude will stand him in good stead.

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