Flamboyant businessman Vijay Mallya has stepped down as the director of Mangalore Chemicals & Fertilizers (MCFL) with immediate effect.

It is notable that Mallya's UB Group was trying its best to retain control of MCFL after rival Deepak Fertilizers had initiated a hostile takeover of the firm. The MCFL today informed the Bombay Stock Exchange about its decision but did not provide the reason for the decision.

Deepak Fertilizers has been trying to gain control of MCFL for the last one year and Mallya's decision to quit comes a month after two competing open offers for the shares of Mangalore Chemicals concluded unsuccessfully, with Deepak Fertilisers and Petrochemicals Corp managing to raise stake to around 32% in the company.

Mallya's resignation proved a good news for the company as its stock jumped 15 percent at Rs 94 while the BSE Sensex was flat. Shares in rival Deepak Fertilizers rose 1.6 percent following the news.

In April 2013, Zuari Fertilisers had acquired about 10 percent stake in the MCFL from SBI group entities and open market, followed by Deepak Fertilisers acquisition of 24.46 per cent stake in the UB group company in July.

Zuari group increased its stake in MCFL to 16.43 percent during July 2013, in two-three rounds. Zuari, Deepak and MCFL compete in the fertiliser business.

The UB Group entered into an agreement with the Zuari group to stop Deepak Fertilisers from taking over MCFL and offered to buy more shares in the firm at a 9 percent higher rate than their rival.