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Sons rise at Mercator Group

Promoter HK Mittal's son Shalabh joins Mercator board while Aayush, son of other promoter Atul Agarwal, joins group's Singapore subsidiary

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Next generation has moved into strategic positions at Mumbai-based Mercator Group as it spreads wings in the oil and gas business across the globe.

The shipping-to-coal major is undertaking a series of restructuring moves coupled with changes in the management.

Shalabh Mittal, son of its promoter and executive chairman HK Mittal, who set up the company from the scratch, has been appointed as an additional director and joint managing director on its board, while Aayush Agarwal, son of the other promoter and managing director Atul Agarwal, has joined its Singaporean subsidiary Mercator Energy Pte Ltd.

HK Mittal and Atul Agarwal are co-brothers, after their respective marriages to sisters – Archana and Manjuli. The Mittal and Agarwal families hold 40.22% stake in Mercator Ltd.

Shalabh already heads a subsidiary Mercator Lines (Singapore) Ltd, also headquartered in Singapore. The bulk shipping company specialises in transportation of coal and crude oil and focuses mainly on transportation activities in India and Indonesia.

Aayush joined MEPL, a step-down overseas subsidiary of the parent, engaged in carrying on Mercator's business of oil & gas and allied services, as deputy project manager. He has done his BE in mechanical engineering from BITS Pilani (Dubai) and masters from Cornell University.

Aayush's father Atul Agarwal holds 6% of MEPL's equity while Mercator Ltd holds 79.59%. This follows a recent issue of MEPL's shares to professionals. Mercator Petroleum Ltd (MPL), which runs Mercator's oil & gas activities, is owned by MEPL (49%) and Mercator Ltd (51%).

Mittal's second son Adip had joined the company two years ago. He is involved exclusively in the operations of the company to look after dredging and tanker divisions. A post-graduate in shipping, trade and finance from Cass Business School in London's City University, Adip also holds an undergraduate degree from The Ohio State University. He had been appointed as business associate of the company effective November 1, 2010, for a period of three years.

As reported earlier by dna, Mercator is mulling several moves to strengthen its oil & gas subsidiary Mercator Petroleum Ltd (MPL), including listing it on a foreign stock exchange after merging an existing offshore arm with it. Also, Mercator is in the process of shifting their entire oil & gas operations to Singapore.

The company, which diversified into many sectors such as coal trading and dredging business, after having exposed to the volatile shipping markets, however saw its share price slump over last few years. As on January 1, the parent company's market cap stood at Rs 617 crore. On Thursday, the stock rose 3.3% to Rs 25.20 per share.

"In 2013-14, we tamed the odds and delivered value, despite subdued economic prospects. Operating profits (on a consolidated basis) touched Rs 659 crore against Rs 506 crore in previous year on account of our integrated business model and investment discipline," said HK Mittal, in the annual report.

AION Capital Partners, a special situations-focused investment firm jointly set up by ICICI Venture and Apollo Global Management, has invested $71 million in Mercator group through convertible bonds. While it invested $55 million in MEPL, $16 million was infused in the parent company, Mercator Ltd.

As per the agreement with AION, the debt will be compulsorily converted into equity shares of MEPL when its gets listed, at a pre-determined discount to the listing price. If MEPL decides against listing, the debt will be repaid at a pre-determined yield to maturity at the end of six years, according to a company statement.

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