Rallis completes journey as new subsidiary of Tata Chem
Business Standard — November 11, 2009

Excerpts:

Tata Chemicals acquires 980,000 shares at Rs 908.51 a share.

Pesticide maker Rallis India is now a subsidiary of Tata Chemicals. The latter acquired a further 4.09 per cent stake in Rallis, part of the Tata Group and one of the oldest major private sector companies in the country, for about Rs 89 crore to make it a subsidiary.

Tata Chemicals has acquired 980,000 shares at Rs 908.51 a share, inclusive of premium of Rs 898.51 a share, through a preferential allotment yesterday.

“With the said acquisition, the shareholding of the company in Rallis has increased from 45.97 per cent to 50.06 per cent and Rallis has become a subsidiary of the company,” said Tata Chemicals in a filing to the stock exchange.

In August, Tata Chemicals, an agrochemical company, had purchased a 35.8 per cent share in Rallis India through a share transfer from promoter group companies, to increase its stake in Rallis to 45.97. The shares were bought for about Rs 360 crore from group companies such as Tata Tea (24.52 per cent), holding company Tata Sons (7.52 per cent), Tata Investment Corporation (2.42 per cent) and Ewart Investments (1.35 per cent).

On August 19, Business Standard had reported that the Group was planning a merger of the two entities, which would lead to a 15-20 per cent reduction in costs, including raw material and employee costs, freight and forwarding charges and other operational expenditures.

Tata Chemicals’ fertiliser business and Rallis cater to the same set of consumers, farmers. Though the nature of the business of the two companies is different, there are future synergies in marketing and distribution, an Emkay Research report had said.

The combined entity can offer a more diversified product basket to farmers and boost overall revenues, stated the report.

Tata Chemicals, which generate over 40 per cent of its revenue from fertilisers such as urea, DAP and NPK, has annual sales of about Rs 12,200 crore and Rallis India has sales of over Rs 850 crore from crop protection products which includes pesticides, insecticides, seeds, micro nutrients and contract manufacturing of agrochemicals for multinationals.

Rallis is the sole distributor for Tata Chemicals fertilisers in its main markets in the north and north-east regions. Tata Chem manufactures about 12 per cent of the urea produced in the country by the private sector. It also manufactures inorganic chemicals such as sodium bicarbonate, soda ash, salt, bio-fuels and fresh farm produce in a joint venture. A few years earlier, Rallis had sold its Bangalore research and development unit to Advinus Therapeutics, another Tata Group-promoted drug discovery company.