The Hindu Business Line : Lodha's audit firm opts out of Birla Ericsson

LODHA & Co, the audit firm of Mr R.S. Lodha, has opted out of the statutory auditorship of Birla Ericsson Optical Ltd, the joint venture company between the M.P. Birla Group and Ericsson Cables AB of Sweden.

According to the notice issued to the shareholders convening the 12th annual general meeting of the company, Lodha & Co has expressed its "unwillingness to be re-appointed" as the auditors of the company.

The company has resolved to appoint the chartered accountants firm of Clark, Gardner, Wolf & Co as the new auditors in place of the retiring auditors, to hold office from the conclusion of the meeting until the next meeting.

The AGM, seeking approval of this and other resolutions, is scheduled to be held on July 20, at Rewa in Madhya Pradesh.

The notice to the shareholders was signed by the company President (Commercial) & Secretary, Mr Y.S. Lodha, and is dated May 5, 2004. Hence, it seems that Lodha & Co's decision not to seek re-appointment was taken long before the death of Priyamvada Birla, late chairman of the MP Birla Group.

Mr R.S. Lodha, co-Chairman of Birla Corporation Ltd, the flagship of the MP Birla Group, as per late Priyamvada Birla's last will, has emerged as the single beneficiary, inheriting all her assets.

The matter has created a huge controversy and is set to be challenged by the Birla clan in the court soon.

Mr D.R. Bansal, Managing Director of Birla Ericsson, preferred to remain non-committal.

When queried by Business Line about the reasons behind Lodha & Co's decision, he said: "It should be answered by the auditor firm or the board of directors."

This would also be the first AGM of a MP Birla Group company to hold a shareholders' meeting after the demise of Priyamvada Birla. The meeting is to be chaired by Mr Bansal.

"I have been advised by the company's secretarial department to chair the meeting in the absence of the chairman. According to them, the managing director is the most suitable candidate in the absence of the chairman", he added.

The Madhya Pradesh-based Birla Ericsson manufactures fibre optic cables, and has an installed capacity of 41,984 cable kms of optical fibres and 11,566 cable kms of ribbon optical fibre cable per annum.

The MP Birla group holds 38.94 per cent in the company through several group companies such as Vindhya Telelinks, Universal Cables, Punjab Produce & Trading Co, East India Investment, Hindustan Medical Institution and Birla Corporation, as on June 30, 2004.

Ericsson holds 27.5 per cent. The rest is held by public, banks and financial institutions.

For the year ended March 31, 2004, the company suffered major reverses. Its turnover dropped to Rs 21.46 crore from Rs 86.21 crore registered during 2002-03.

Net loss of the company increased to Rs 10.02 crore from Rs 3.31 crore in the previous financial year.

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