Man Industries demerger to unlock value, say promoters

After splitting Man Industries between them, the promoter Mansukhani brothers are busy charting out plans for their line of businesses.

Last week, the promoters ended their three-year old spat that saw pipe business going to elder brother Rameshchandra Mansukhani and real estate arm, Man Infraprojects, to younger brother J C Mansukhani.

Both brothers with whom dna spoke seemed relieved as they will now get to concentrate on their businesses separately.

R C Mansukhani, who stays as the chairman of Man Industries, said the settlement was a win-win for all.

“This was never an ownership dispute, it was only management dispute. Ownership dispute we have resolved. Management problem is also resolved as we will be separately handling the two companies, ” he said.

“I am happy because finally we have settled and we are out of the mess, we have a new direction. Whatever we have lost in last couple of years because of the fight we can recover,” younger brother J C Mansukhani said.

Richa Karpe, director, investments at Altamount Capital, which provides services to many family businesses, said the success of the demerger will depend on several factors.

“Sometimes businesses prosper as the family members can finally focus on the business rather than get distracted by family issues. In other cases the separated  businesses start suffering as the power of the combined entity is lost. Often you see one business prosper and other fail.”

K G Mantri, director of Man Industries, said the de-merger will be hugely beneficial for shareholders as at current market price of around Rs 70, the shareholders will get shares from both the companies.

“The book value of Man industries is more than Rs 60-65 and book value of Man Infraprojects will also be Rs 40,” he said.

However, analysts differ.

A Crisil report post de-merger said, “A sizeable portion of Man Industries’ net worth is invested as inter-corporate deposits in Man Infraprojects; Man Industries’ net worth and gearing may be impacted post the demerger. Its operating performance and debt protection metrics may be constrained by the ongoing slowdown.”

Man Industries’ management too sees this fiscal remaining subdued due to slowdown in the domestic market.

“The current business environment is very challenging but we have Rs 1,000 crore order book and at this moment we have participated in tenders worth Rs 5,000 crore,” Mantri said.

R C Mansukhani is, however, betting on 2014-15 as he expects several large orders from the oil & gas sector from both domestic and international markets.

Man Infraprojects’s plan
JC Mansukhani, who has been associated with real estate business for over two decades now, is looking to grow Man Infraprojects. Apart from residential and commercial projects, the company is eyeing infrastructure projects like IT parks and special economic zones, he said.

The company has one residential and commercial project under construction in Mumbai which is expected to be completed in 6-8 months.

It is also keen to develop a residential project in Indore, where it has a huge land parcel. “We are getting offers for developing 3-4 projects in Mumbai from land owners who do not have development capabilities,” JC said.

“We have some other cash flow from other business like steel trading, which can be used in real estate,” he said. Man Infra is also looking at developing low-cost housing projects in areas like Thane, Palghar and Vasai near Mumbai.

To begin with Man Infraprojects will have assets close to Rs 200 crore and cash of Rs 15-20 crore.

A new beginning
R C Mansukhani is betting on 2014-15 as he expects several large orders from the oil & gas sector from both domestic and international markets.

Man Infraprojects is also looking at developing low-cost housing projects in areas like Thane, Palghar and Vasai near Mumbai.