The Hindu Business Line : Kesoram Industries increases stake in Mangalam Timber — Acquires 5.35 pc stake from Orissa Govt unit

KESORAM Industries Ltd has increased its holding in Mangalam Timber Products Ltd by acquiring 5.35 per cent from an Orissa Government outfit for Rs 2 crore.

Both Kesoram Industries and Mangalam Timber are B.K. Birla group companies. The former is one of the major promoters of Mangalam Timber. Prior to this acquisition, the promoters' stake in Mangalam Timber was 23.73 per cent.

The Industrial Investment Promotion & Investment Corporation of Orissa Ltd (IPICOL) held 9.80 lakh equity shares of Mangalam Timber. Kesoram Industries paid Rs 20.31 for an equity share of Rs 10 face value held by IPICOL.

According to Mr S.K. Parik, Managing Director of Kesoram Industries and Director of Mangalam Timber, the shares held by IPICOL were transferred only last week after several months of negotiations.

For the year ended March 31, 2005, the company registered its highest ever turnover of Rs 61.72 crore against Rs 43.66 crore in the previous financial year. Its net profit during 2004-05 is Rs 2.88 crore. Accumulated losses of Mangalam Timber (after adjustments of deferred tax assets worth Rs 7.89 crore) had dropped to Rs 6.41 crore from Rs 19.60 crore in March 2004.

Mr G.S. Gupta, Managing Director of Mangalam Timber, said that thanks to the latest trend of profitability, the rest of the accumulated losses is likely to wiped out during the current financial year.

The company, which was referred to BIFR (Board for Industrial & Financial Reconstruction) in 1998, is no longer a sick company. "We would seek a de-registration from BIFR in October, this year," he said.

With improving profitability, the company has revoked its earlier decision of reducing its paid-up share capital from Rs 10 per share to Rs 4 per share. However, the board is not paying a dividend this year, but Mr Gupta said that it would in a "few years' time".

As a move towards backward integration, the company had commissioned a 40-tonne-per-day formaldehyde plant, about a year ago, at Rs 2 crore. This plant is expected to generate 10 per cent of the company's revenues.

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