The Hindu Business Line : Coromandel Fert inks pact with IFFCO

FOLLOWING the Andhra Pradesh Government's divestment of stake in Godavari Fertilisers and Chemicals Ltd (GFCL) in favour of the Chennai-based Murugappa group-owned Coromandel Fertilisers Ltd (CFL), the latter has entered into a fresh shareholders agreement with the Indian Farmers Fertiliser Cooperative Ltd (IFFCO), the co-promoter of GFCL with a current equity holding of 25.88 per cent.

Taking into consideration the changes taken place in the composition of the GFCL board and the consequential change in the management of the company, the fresh agreement signed by CFL and IFFCO recently.

According to GFCL officials, these changes have necessitated certain amendments to the Articles of Association of the company for which it proposes to seek the consent of its shareholders at the annual general meeting scheduled for September 17 at Secunderabad.

In terms of the changes in Articles of Association, Coromandel should make all the significant management policy decisions of GFCL including the appointment of the GFCL Managing Director in written consultation with IFFCO.

In the event of IFFCO disagreeing with Coromandel's proposal for appointment of the Managing Director, the same should be placed before the board at a duly convened meeting of the board, for which advance notice of three business days should be given to all the directors of the company.

Further, as per the changes proposed, no significant management policy decisions of the company should be taken except at a duly convened meeting of the board, for which advance notice should be given to all the directors of the company.

In consideration of the promotional role played by IFFCO, so long as IFFCO is the legal and beneficial owner of not less than 79.7 lakh shares of GFCL, it would have a right to a share in the marketing of GFCL's annual production of DAP/NPK up to a maximum of 25 per cent of the existing annual production of GFCL. However, resolution makes it clear that, such sales should be on terms and conditions decided by the GFCL board and such terms and conditions should not be less advantageous than those offered to any of other GFCL's marketers and distributors.

Instead, IFFCO can get DAP/NPK fertilisers manufactured in GFCL's plant up to 25 per cent of the existing annual production capacity by supplying raw materials at IFFCO's cost, and on payment of conversion charges to GFCL to be mutually determined on a similar basis as agreed between IFFCO and GFCL in the past.

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