Monsanto increases stake in Indian arm

Monsanto increases stake in Indian arm
ENS ECONOMIC BUREAU

MUMBAI, MAR 15: US major Monsanto Company is restructuring its agriculture businesses in India by integrating operations under Monsanto Chemicals of India Ltd (MCIL). MCIL will acquire Monsanto group firms involved in seed research, production and marketing. The deal will increase Monsanto group's shareholding in MCIL to about 72 percent from 40 per cent.

"The MCIL board today took a unanimous decision supporting the strategic move," Sekhar Natarajan, managing director of MCIL told a news conference here today.

"This integration is being done through a series of strategic acquisitions that will help us build competitive advantage in the market place in a changing situation," he said. Monsanto Company of the US is represented in India by its 100 per cent subsidiary Monsanto India Ltd (MIL).

MIL holds a 100 per cent stake in Monsanto Enterprises Ltd, which is involved in research and development activites in India. Monsanto Company of the US, Which holds a 40 per cent stake in MCIL, has a 100 per cent stake in Monsanto Technologies India Ltd (formerly Cargill Seeds) through a Mauritius-based company, Bretco, Natrajan said.

MCIL will acquire the entire shareholding of Monsanto Technologies India Ltd and the agriculture business and related assets of Monsanto Enterprises and Monsanto India.

"MCIL will issue 689,189 equity shares to Monsanto Enterprises Ltd, 222,972 shares to Monsanto India Ltd and 14,05,405 shares to Bretco. The valuation of the entire transaction is around Rs 340 crore," Natarajan said. MCIL shares ended Wednesday up Rs 35 at Rs 926 on the Bombay Stock Exchange.

Explaining the rationale for the integration, Sekhar said the consolidation is consistent with its philosophy of enhancing shareholder value. MCIL will now be in a position to cater to export markets in South East Asian and South Asian countries. ``As a result of this integration, MCIL will have increased production opportunities and wider marketing and distribution breadth and depth for enhanced customer focus.the integration process will not involve any cash outflow from MCIL, since the transaction will be completed through the issue of equity shares of MCIL on a prefential basis,'' he said.

The company will now be in a better position to leverage its higher net worth for future growth. The proposal is subject to the approval of the general body and the requisite statutory authorities, and in accordance with SEBI and RBI guidelines, Sekhar added.