Deepak Fertilisers and Petrochemicals Corporation (DFPCL) has acquired a 49 per cent equity stake in Desai Fruits and Vegetables for almost US$12m.
The diversified fertilisers business, which operates in three core areas – chemicals, real estate and agribusiness – will invest Rs607.7m (US$11.99m) through the issue of equity shares to be paid over the next 30 months, DFPCL said in a statement filed with the Bombay Stock Exchange.
A consortium of Swiss investors known as Contract Farming India AG currently holds a majority stake in Desai, with the balance held by its Indian promoters, according to a report in India’s Business Standard. The Gujarat-based company was founded by chairman Ajit Desai, who remains a minority shareholder, but the investment by DFPCL will dilute the existing holdings of the European strategic investor consortium.
The deal values Desai Fruits and Vegetables at Rs1.24bn (US$24.47m), much higher than the current market value of the company’s facilities and infrastructure, which is put at close to Rs240m (US$4.74m), according to the Business Standard.
“The valuation of the deal is based on our future business strategy and on estimates of future cash flows,” an unnamed spokesperson for Desai Fruit and Vegetables told the business daily. “We perceive Desai Fruits and Vegetables to be an ideal turnaround case, and see immense potential in this deal going forward. DFPCL brings with it robust management skills along with expertise in supply chain management and marketing and linkages with farmers and farm inputs.”
Desai Fruits and Vegetables presides over a strong farmer base and it has projected a gross harvest volume of 300,000 tonnes of bananas by 2014/15, almost triple its current production levels. It is India’s largest banana exporter, currently accounting for an estimated 20 per cent of the country’s total exports of the fruit.
With the new infusion of investment, Desai Fruit and Vegetables reportedly plans to beef up its packhouse and ripening infrastructure to support its goals of supplying high-quality produce both within India and into global markets. Although the company will continue to focus on bananas in the short-term, it has longer-term plans to diversify its presence into other types of fresh produce, according to the Business Standard.
