Saroj Poddar will create Zuari holding co for agri

Mumbai: Adventz Group, controlled by Saroj Poddar, will set up a structure in which publicly traded company Zuari Agro Chemicals will become the holding company of the agricultural unit, which contributes 60% to the $ 3 billion in revenue of the business. The planned structure of the group resembles how Tata Sons and Reliance Industries are organized, with a central unit managing company-wide activities such as finance and independent business branches focused on specific segments.
Poddar, the reluctant Kolkata businessman, acquired Zuari Agro after his stepfather KK Birla bequeathed him and his wife Jyotsna the fertilizer business. He then stepped up the business by buying Mangalore Chemicals from Vijay Mallya, the former president of United Breweries and United Spirits.
As part of the overhaul, Zuari Agro is in the process of transferring Goa’s farm-based retail and fertilizer business to two separate subsidiaries. The realignment will leave Zuari Agro with the residual fertilizer business (the only superphosphate or SSP plant in Maharashtra) and investments in several operational entities. “We will explore options including establishing the SSP business in the future,” said Suresh Krishan, non-executive director of Zuari Agro.
Zuari Agro, of which Poddar and his family own 65%, has a market capitalization of over Rs 520 crore. “A holding company structure allows for a higher majority stake with a lower profit stake in operating entities,” said Shriram Subramanian, founder of InGovern.
Krishan added that the restructuring also helps attract investment in specific companies, as some investors wouldn’t want to have a finger in every pie. Zuari Agro is at an advanced stage to sell up to 30% in agricultural retail (Zuari FarmHub) to the Moroccan OCP.
Adventz is not, however, fazed if Zuari Agro trades at a discount on the stock exchange after the status change, as traditionally the market value of holding companies like Pilani Investments (controlled by Kumar Mangalam Birla) is captured at a discount. “We are fully aware that there will be a discount for the holding company, but at the same time, the kind of value that the individual coins can generate on their own will be compensated,” Krishan said. After the restructuring and expansion of the fertilizer business, Zuari Agro will be close to the leading private sector player Coromandel (part of the Murugappa group) in terms of capacity (over 3 million metric tonnes).
Besides agri, Poddar has interests in engineering and infrastructure, lifestyle and financial services. The septuagenarian is best known for introducing men’s shaving brand Gillette, French furniture maker Gautier and Duracell batteries to Indian consumers.
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