on Oct 18, 2021)Mumbai: Saroj Poddar-controlled Adventz Group will implement a structure in which the publicly listed will become the holding company of the agriculture unit, which contributes 60% to the enterprise’s $3-billion revenue. The group’s planned structure resembles the way Tata Sons and are organised, with a central unit handling corporate-wide activities such as finance, and independent business arms focused on specific segments.
Poddar, the reticent businessman from Kolkata, gained Zuari Agro after his father-in-law K K Birla bequeathed the fertiliser business to him and his wife Jyotsna. He subsequently ramped up the business by acquiring Mangalore Chemicals from Vijay Mallya, the former chairman of United Breweries.
As part of the overhaul, Zuari Agro is in the middle of transferring the farm retail and the Goa fertiliser businesses to two separate subsidiaries. The realignment will leave Zuari Agro with the residue fertiliser business (the single superphosphate or SSP plant in Maharashtra) and investments in multiple operating entities. “We will explore options including carving out the SSP business in the future,” said Zuari Agro non-executive director Suresh Krishan.
Zuari Agro, in which Poddar and family own 65%, has a market cap of over Rs 520 crore. “A holding company structure helps to have a higher controlling stake with lower beneficial shareholding in operating entities,” said InGovern founder Shriram Subramanian.
Krishan added that the restructuring also aids to attract investments in specific businesses as certain investors would not like to have a finger in every pie. Zuari Agro is in advanced stages to sell up to 30% in the farm retail business (Zuari FarmHub) to Morocco’s OCP.
Adventz is, however, unfazed if Zuari Agro trades at a discount in the stock market after the change in status as traditionally the market value of holding companies are captured at a discount. “We fully realise that there will be a discount for the holding company but at the same time the kind of value that the individual parts can make on their own will offset,” Krishan said. After the restructuring and the expansion of the fertiliser business, Zuari Agro will be close to the top private sector player Coromandel in terms of capacity.
