Kolkata: Manaksia Ltd, Asia’s largest maker of container caps, could be carved up under a succession plan.
Lines have been drawn to demarcate management responsibilities within the extended Agrawal family, which controls Manaksia with a 59% stake.
Founder and managing director Basant Kumar Agrawal said he isn’t “averse” to splitting the businesses among family members “if it increases shareholder value”. “Also, if it helps us grow faster than the pace at which we have grown so far, I wouldn’t mind,” he added.
Formerly called Hindusthan Seals Ltd, Manaksia earned 75% of its Rs845 crore revenue in fiscal 2010 from its aluminium and steel businesses, according to its annual report.
Though, Manaksia is a leader in the packaging business and is best known for manufacturing aluminium caps, crowns and metal containers, the segment accounted for only 12% of the company’s revenue in fiscal 2010.
Manaksia also produces paper—it runs a mill in Nigeria—and mosquito repellent coils. These business segments contributed 3% and 5%, respectively, of the firm’s revenue in 2009-10.
“Some initial discussions (on succession) have happened, but it may take some more time to firm up plans,” said Agrawal, 65, a first-generation entrepreneur who launched the firm in 1972.
He began with metal container caps, built several factories across India under different companies to comply with regulations to expand that business. Eventually, the group’s diverse businesses were integrated under Hindusthan Seals, which was renamed Manaksia in 2003-04.
Other key people from the extended Agrawal family who have leadership roles in the company are Basant Kumar Agrawal’s uncle Suresh Kumar Agrawal; cousins Sushil Kumar Agrawal and Sunil Kumar Agrawal; and sons Navneet Agrawal and Aditya Agrawal.
Navneet and Aditya Agrawal aren’t on the board of the company, the others are directors.
Suresh Kumar Agrawal heads the businesses in Nigeria and Ghana.
Besides being a leader in packaging, the company manufactures value-added steel and aluminium products in those two countries. Its operations in both Nigeria and Ghana are profitable, according to Basant Kumar Agrawal.
Sushil Kumar Agrawal is responsible for the manufacture of mosquito repellent coils and aluminium and steel products at Manaksia’s factory at Chandrani in Gujarat, while Sunil Kumar Agrawal looks after the company’s Haldia plant in West Bengal. The company runs a steel rolling mill and manufactures value-added aluminium products at Haldia.
Basant Kumar Agrawal looks after the packaging business, assisted by his younger son Aditya Agrawal, 30. His elder son Navneet Agrawal, 38, leads the fledgling Georgian operations, where the company has built a 100,000-tonne-a-year steel products manufacturing facility, Basant Kumar Agrawal said. The facility is to commence production soon.
Being the family patriarch—his uncle Suresh Kumar Agrawal is younger than him—Basant Kumar Agrawal advises family members on all businesses.
Manaksia’s shares closed at Rs80.90 apiece on the Bombay Stock Exchange on Thursday, down 50 paise, or 0.61%, while the bourse’s benchmark Sensex shed 545.92 points, or 3%, to close at 17,632.41 points.
In December 2007, the company sold shares in an initial public offering (IPO) at Rs160 each. The issue was recommended by several analysts and was subscribed nine times.
However, since then Manaksia’s shares have almost always trailed the issue price and some analysts are of the view that carving up the company would benefit shareholders.
“The sum of parts valuation” is likely to be higher, said a Kolkata-based stock broker, who did not wish to be named.
At the current share price, Manaksia is valued at Rs558 crore.
“Creating separate companies could result in the businesses getting better valuation in the market as has been the case with many companies that have been carved up,” the stock broker said.