Mumbai, Aug. 12: Tata Chemicals has initiated steps to become the single largest shareholder of Rallis India by buying out the stakes of the other promoters — all Tata entities — of the company.

The board of Tata Chemicals today approved a proposal to buy the equity shares of Rallis from other associate companies, including Tata Tea, Tata Sons, Tata Investment Corporation and Ewart Investments Ltd, through inter-se transfer of shares.

The soda ash, salt and fertiliser maker now holds around 9.40 per cent in Rallis and wants to purchase another 35.80 per cent.

Tata Chemicals sees strong synergies from the businesses of both the companies; it has a strong presence in crop nutrition, while Rallis is a leading player in crop protection.

The price of the shares will be determined in accordance with the Sebi (Substantial Acquisition of Shares & Takeover) Regulations, 1997, and the rules of the stock exchanges.

The purchases will be made at a price not exceeding Rs 850 per share.

This is the first instance in recent times of a listed Tata company wanting to increase its holding in another listed entity of the same group. For the quarter ended June 30, promoter holding in Rallis stood at 45.20 per cent, with Tata Tea owning 24.52 per cent, Tata Chemicals 9.40 per cent, Tata Sons, 7.52 per cent, and Tata Investment Corporation, 2.42 per cent.

Though the announcement came after market hours, the bourses seem to have got a wind of the development as the Rallis stock surged nearly 7 per cent to end at Rs 736.95 on the BSE today.

Tata Chemicals’ plans to hike its stake in Rallis come at a time when the latter is optimistic of better prospects.

At its recent annual general meeting, chairman R. Gopalakrishnan told the shareholders that the next 10-15 years might be a “golden period’’ for agriculture, globally, and Rallis was well positioned to benefit from such a boom.

Tata Chemicals is now the second largest producer of soda ash in the world with manufacturing facilities across four continents.

It is the market leader in branded iodised salt and also makes urea and phosphatic fertilisers.