As part of strategy, UPL(formerly known as United Phosphorus Ltd) on November 23 announced the amalgamation of the group’s seed firm Advanta (UPL holds 48.4 per cent) with itself.

As part of strategy, UPL(formerly known as United Phosphorus Ltd) on November 23 announced the amalgamation of the group’s seed firm Advanta (UPL holds 48.4 per cent) with itself. The motto of the consolidation is to provide all-agri-solutions through one single entity and enhance shareholder value. UPL will issue 1 equity share and 3 convertible preference shares against every equity share of Advanta.

Further, holders of 100 GDRs will be issued 106 GDRs of UPL and 100 FCCBs of UPL will be issued for 100 FCCBs held in Advanta. The company will issue 77.5mn fresh equity shares and 181.8mn preference shares to Advanta’s shareholders.

Post-merger UPL’s promoter shareholding in combined entity will decline from 29.8 per cent to 27.8 per cent. The amalgamation process will roughly take about eight to nine months for the completion and consolidated annual report will be from FY2017E.

Since the beginning of the ongoing financial year, the share price of UPL and Advanta climbed 28.23 per cent and 29.17 per cent to Rs 438.15 and Rs 467.80, respectively on November 24. Benchmark index BSE Sensex fell over 6 per cent during the same period.

In the past five years, UPL registered net profit growth of 16.8 per cent annually to Rs 1,144.03 crore in 2014-15. The company posted net profit of Rs 526.16 crore in 2009-10. Advanta’s bottomline grew 25.29 per cent annually in the last five years.

According to market experts, the management of UPL has indicated that the amalgamation will bring synergetic benefits in terms of presence across value chain from seeds to post-harvest activities, increase in geographical reach, improvement in customer access, strong focus on innovative and differentiated products and cost and financial benefits, to save annually around Rs 90 crore and another Rs 240 crore as synergetic benefits. Management has also guided to reduce net debt to Rs 3400 crore (current Rs 4530 crore) by FY16.

Market experts are bullish on UPL shares post the announcement of the amalgamation. Sharekhan in a research note said, “The amalgamation of Advanta with UPL will be a synergistically beneficial deal in three to five years, and it will help both the companies to improve its operational efficiency and improve its growth prospects which will improve its cash flow and return ratios in long term. However, synergy benefits will take a couple of years to reflect at earnings level. We see the deal as supportive with re-rating trigger for UPL over medium to long term. We have our ‘Buy’ rating on the stock with an price target of Rs 550.”

Edelweiss is also bullish on UPL shares. The brokerage house said, “Our positive stance on UPL stems from its diversified agricultural business model and sharpened focus on organic growth along with strengthening balance sheet. We have not considered the impact of the merger in our estimates currently. UPL has been trading in the 6-15x P/E range over the past 5 years. We maintain ‘Buy’ ration of UPL shares with target price of Rs 560.”

UPL has 28 manufacturing facilities in 9 countries and is 11th agrochemical company globally.

New fund offers (NFOs) seem to be moving in a low gear as fund houses have launched only 340 new schemes in April-September of 2015 following Sebi’s direction to rationalise and consolidate offerings with similar goals. (Illustration: Shyam)

New fund offers (NFOs) seem to be moving in a low gear as fund houses have launched only 340 new schemes in April-September of 2015 following Sebi’s direction to rationalise and consolidate offerings with similar goals.

In comparison, mutual funds had come out with 1,059 NFOs for the whole of 2014-15.

The numbers stood at 1,023 and 1,168 in 2013-14 and 2012-13, respectively.

“Over the past few years, there has been a declining trend in the issuance of NFOs. This trend has been partly due to the regulator’s direction to rationalise and consolidate mutual fund schemes with similar objectives,” a report titled ‘Indian Mutual Fund Industry- The Road Ahead’ from Assocham today said.

“The requirement from the regulator to demonstrate the differentiation in investment style and attributes of a potential new fund has also impacted the pace of approvals.”

Furthermore, the requirement of disclosing details and number of funds managed by each fund manager has also led to more circumspection.

Most of the new schemes launched in April-September have been aimed at investment in equity and equity-related securities.

Besides, the products have been focused on diversified funds, exchange-traded funds, tax-saving instruments and arbitrage schemes.

Overall, a total of 120 draft documents have been filed with capital markets regulator Sebi to roll out new NFOs in the current fiscal so far.

Speaking at the Assocham event, Sebi executive director (Investment Management Department) Ananta Barua said: “Mutual Funds should come out with simple products so that more people can invest in such schemes. Currently, only two per cent people in India invest in mutual funds.”

The stock markets ended in the red for the second straight day on Tuesday as the benchmark BSE Sensex slipped by about 44 points to end at 25,775.74.(Photo: Reuters)

The stock markets, debt and currency markets are closed on Wednesday on account of ‘Guru Nanak Jayanthi’. All wholesale commodity markets in New Delhi, including bullion and metals, are also closed.

The stock markets ended in the red for the second straight day on Tuesday as the benchmark BSE Sensex slipped by about 44 points to end at 25,775.74 on offloading of positions by participants amid a mixed trend in the global markets.

Caution before the expiry of November series contracts in the derivatives segment on Thursday had a bearing on market sentiments.

The Indian rupee closed at 66.32/33 per dollar on Tuesday compared with its previous close of 66.47/48.

Sept 25, 2012
USL and Diageo officially confirm that Diageo is in discussion with USL and United Breweries (Holdings) to acquire controlling stake in USL.

Nov 9, 2012
Diageo announces it will acquire 3.77 cr shares, representing 26% stake at R1,440 per share

April 2, 2013
Lenders sell USL shares in open market as open offer price of R1440 appear unattractive

April 10-26, 2013
Diageo’s first attempt to acquire shares from public shareholders gets muted response

May 27, 2013
USL board announces issuing 1.45 crore shares to Diageo on preferential basis. Diageo pays  R2,092 crore for stake buy

Dec 20, 2013
Karnataka High Court annulled sale of 6.9% stake in USL to Diageo by guarantor United Breweries (Holdings)

May 26, 2014
Diageo gets Sebi nod for open offer to acquire 26% stake in USL

June 2014
Diageo raises open offer price to R3,030/ share. Transaction valued at R11,423 cr on offer price

June 11-24, 2014

Diageo acquires majority stake in USL and raises ownership to 54.7% Largest in-bound deal since Vedanta-Cairn merger in Dec 2011

Nov 28, 2014

Minority shareholders defeat nine out of 12 special resolutions during company’s EGM, bringing setback to the integration between USL and new owner Diageo Plc.

Jan 10, 2015

United Spirits gets minority shareholders nod for Diageo licensing and cost sharing agreements with certain subsidiaries of its parent Diageo Plc

Early 2015

USL appoints PwC UK to conduct forensic audit on USL accounts from 2010-2013 for alleged fund diversion and financial irregularities in related party transaction among UB group companies

April 2015

USL board ask Vijay Mallya – owning 4% stake in USL, to step down for his involvement in alleged financial irregularities

May 1, 2015

The ICAI questions USL’s two auditors for financial irregularities in USL books from 2010-2013 to various United Breweries (UB) group entities, and alleged fund diversion of R2,100 crore

May 2015

Sebi asks United Breweries to restate accounts for last two years to address issues flagged by the auditors

July 2015

USL, owned by Diageo, sells 3.21% stake in United Breweries for R872 crore to Heineken International BV, the co-promoter of the beer company. Heineken’s stake rises to 42.2%

Nov 2015

Supreme Court admits petitions filed by British group Diageo Plc and United Breweries Holdings in a matter related to the sale of USL

Source: Stock exchange announcement, Media reports

Assign ‘add’ rating on Adani Ports with a revise SOTP-based target price to R 310 (from R340 per share) led by lower coal and other volumes estimates across ports, and higher revenue share to maritime boards for concession renewal.

Adani Ports has intensified its focus on (1) increasing the share of containers and liquid cargo volumes in the overall mix, (2) replicating the success of Mundra across other ports, (3) reducing the debt cost further, and (4) monetizing the SEZ. The benefits of these will fully reflect in the medium term. The present high mix of bulk cargo and EXIM slowdown will impact in near term.

During our recent meeting, the management outlined its focus on the growing share of container cargo over time. Recent additions of Vizhinjam and Kattupalli ports corroborate this strategy. The company has similar plans to grow liquid volumes and sees strong uptick in demand at key ports (Mundra, Hazira). Such a strategy will reduce exposure to bulk cargo where visibility of business growth over the medium-term is low, in our view. The other areas of management focus are replicating the success of Mundra (fungible capacities, high level of mechanization, tight leash on capex/opex) across other ports, and further reducing the cost of debt for both foreign currency and domestic debt helped by good credit rating. Adani Ports now has 10 ports in its fold, including Kattupalli (acquisition pending approvals).