Deepak Fertilisers & Petrochemicals Corporation Ltd is acquiring 49 per cent with management control in agri products firm Desai Fruits & Vegetables that is also the country’s largest exporter of bananas for Rs 60.77 crore.
Navsari(Gujarat)-based Desai Fruits & Vegetables(DFV) is a decade old firm which is majority owned by a consortium of European investors through Contract Farming India AG, a company based in Zug, Switzerland. The Desai family led by Ajit Desai (chairman and managing director of the company) is reportedly a minority shareholder in the firm.
As per the deal, Deepak Fertilisers & Petrochemicals will invest Rs 60.77 crore through fresh issue of equity shares to be paid for over the next 30 months. In effect this would dilute the existing holdings of the existing European strategic investor consortium as well as the Indian promoters. This values the firm at Rs 124 crore.
As per VCCedge, the financial research platform of VCCircle, DFV churned out revenues of Rs 45 crore for the year ended March 2010.
Assuming a growth figure of 20-25 per cent for 2010-11 based on the company’s 27 per cent revenue increase during 2009-10, it would have reported topline of around Rs 57 crore in FY11. This translates into valuation multiple of just over 2x previous year’s sales.
The funds infusion will be utilised primarily to build infrastructure to sell fresh produce in both Indian and global markets.
DFV is engaged in a wide range of tropical fruits and vegetables including over 10 types of fruits and 30 types of vegetables. However, its key focus over the years has been on four key products: banana, mango, pomegranate and grapes, with these flagship products contribute over 90 per cent of the total sales.
Pune-based Deepak Fertilisers & Petrochemicals is into industrial and agriculture chemicals and agri products. It manufactures methanol, nitric acid, Iso propyl alcohol, carbon dioxide and hydrogen. Its agribusiness segment provides nutrients and fertilizers. It also offers specialty retailing services under the brand name Ishanya(International Design Centre and Speciality Mall). This deal extends the scope of its agri business.
Deepak Fertilisers shares were trading at Rs 165, up 0.5 per cent in mid-day trades at BSE on Monday, in a flat Mumbai market.
Swiss holding firm Contract Farming India AG picked a majority stake in DFV in 2005. Its shareholders include Pal & Partners and a group of Swiss and German investors. Incidentally, for Pal & Partners, this is not the only such Indian investment.
Two years ago it also floated Citrus International to tap into the market opportunity for frozen concentrate orange juice.
