Vijay Mallya owned-United Breweries plans to sell part of its stake in its subsidiary Mangalore Chemicals & Fertilizers Limited and is in talks with RIL for the same. A technical team of RIL visited the plant last week for conducting due diligence.

The funds will be utilised to shore up the cash flow of Kingfisher Airlines. Vijay Mallya had an option to sell stake in the UB Group for the same.

RIL is evaluating the entry into the fertiliser sector with investments of $3 billion over the next five years. One of the by-products, petroleum coke, produced during the process of crude refining, is to be utilised to gassify its power plant as well as to use it as feedstock for ammonia and urea production.

Transaction Reference: FE

A part of UB Group, Mangalore Chemicals is a fertilizer manufacturing company. It manufactures wide range of products that includes Urea, Di-Ammonium Phosphate, Muriate of Potash, Granulated Fertilizers, Micronutrients, Soil Conditioners and Specialty Fertilizers.

For the year ended March 31, 2010, the company had sales of Rs 2,090.40 Cr and a net profit of Rs 55.66 Cr.

Mangalore Chemicals has a capacity to manufacture 2,17,800 million tonne ammonia (intermediate product), 3,79,500 mt urea, 2,55,500 mt phosphatic fertilisers (DAP & NP 20:20:00:13), 15,330 mt ammonium bi-carbonate (ABC) and 33,000 mt sulphuric acid (SAP) annually.

According to BSE, Breweries Holdings had 12.62% stake in Mangalore Chemicals and group company McDowell Holdings 4.46% as on June 30.

Yesterday RIL acquires 14.12% stake in EIH Ltd-that runs Oberoi brand of hotels & resorts, to enter into the hospitality segment.

Group Activities:

Last year in August, UK based-Diageo wanted to pick up more than 15% in United Spirits and Vijay Mallya did not want to sell more than 15% and eventually talks failed due to anti-trust and monopoly issues.

In March UB Group sells 10.27% in Aventis as a part of the group's plan to deleverage by selling its non-core investments.

In November 2009, United Spirits acquired Tern Distilliaries for 13.42 Cr and in October it raises $350 mn from a QIP for repaying the debt it had taken to acquire Scottish whiskey distiller Whyte & Mackay in 2007.

In May 2007, UB had raised a debt of £595 mn for buying Scotch major Whyte & Mackay. The UB Group has sold 10.27 per cent stake in USL to a private equity company for about Rs 950 crore to retire a part of debt in 2009.

In 2005, Vijay Mallya-led United Breweries acquired Shaw Wallace & Company, following which it was merged with the group’s flagship company USL in 2008.

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