Nirma’s move to de-list sets market abuzz

The decision by Ahmedabad-based fast-moving consumer goods (FMCG) company Nirma Ltd, to de-list from the bourses, announced late on Saturday, has caused quite a ripple among market watchers.

The Rs4,620-core Nirma, which had shaken and stirred detergent market leaders a couple of decades ago with aggressive pricing and a hard-hitting ad campaign, has toned down its aggressiveness since then, and has also diversified into non-related businesses such as pharmaceuticals, cement and processed minerals.

The company, through a release issued on Saturday evening, said that the reason behind the move was to attain "flexibility to carry out its operations" and facilitate its foray into new capital intensive businesses.

Nirma has in fact got into some capital intensive businesses like cement. The company itself has said the move is because the company's shareholders may be averse to the changed risk profile of the new businesses; but some observers see it as a prelude to a sell-off. There is no real reasons why shareholders would object to diversification, these observers feel.

Still others feel it is a move by an intensely private entrepreneur to keep his company away from the public glare. Insiders say the company wants to stay off the disclosures mandatory for a listed entity.

The promoters of the company are expected to come up with an open offer to acquire the balance 3.63 crore equity shares of the company from the public at Rs235 per share. At this price, Nirma's promoters will have to shell out Rs853.66 crore to buy out shareholders. The company's market capitalisation on Friday stood at Rs 3,571 crore.