The Hindu Business Line : Pilani Invest buyout deal wrapped up for Rs 325 cr

THE B.K. Birla and Kumarmangalam Birla combine has completed a leveraged buyout deal for around 24 per cent and 7 per cent stake respectively in Pilani Investments and Industries Corporation from the G.P. Birla and S.K. Birla groups for a total consideration of around Rs 325 crore at Rs 1,500 a share.

Mr B.K. Birla, confirming this to Business Line here on Friday, said part of the deal had been funded through borrowings of around Rs 125 crore from IL&FS. Aditya Finance, the investment wing of the combine, has made the payments, he said.

Mr Birla made it clear that the combine would not allow the representation of the M.P. Birla group on the Pilani board. He said the M.P. Birla group remained unrepresented on the Pilani board since the death of Priyamvada Birla, wife of the late M.P. Birla, on July 3, 2004, and would continue to be so. "We would not allow it until the issue of inheritance of the M.P. Birla group has been settled in the court," said Mr Birla said.

The M.P. Birla group holds around 25 per cent, until recently the single largest block, in Pilani, the investment vehicle of the larger Birla family. After the buyout, the complexion of the holding has now changed in favour of the BK-Kumar combine, at 51 per cent.

Mr Birla said this marked the beginning of a phased untangling of crossholdings among the several outfits of the Birla groups.

"In the Mr S.K. Birla-controlled Mysore Cement, Pilani would seek a mutually agreed divestment of its 20-per cent stake, comprising 26.61 lakh shares. Pilani's other investments such as in the K.K. Birla group outfits Zuari Agro (4.34 lakh shares) and Sutlez Industries (1.14 lakh shares) and the G.P. Birla group outfit Orient Paper and Industries (32,000 shares), however, would continue for now," Mr Birla said.

He indicated that the K.K. Birla group's holding in Pilani of around 7 per cent would also be bought over by his group and Mr Kumarmangalam Birla at a later date.

Mr Birla clarified that the aim of the exercise was to further consolidate the holdings of the BK-Kumar combine in Pilani, which in turn would withdraw from companies under the fold of the other Birlas. Interestingly, Pilani holds 45.31 lakh shares in Tata Steel.

In the future scheme of family inheritance, Mr B.K. Birla's daughters, Ms Jayshree Mohta and Ms Manjushree Khaitan, might have interests in Aditya Investments, the investment arm of the BK-Kumar combine, through which this consolidation process is being spearheaded.

"These are being worked out. But, the firm part of the succession plan is that, from the B.K. Birla stable, Century Textiles and Century Enka control would eventually go to Mr Kumarmangalam Birla, and Ms Jayshree Mohta would take full charge of Jayshree Tea, and Ms Manjushree Khaitan would take control of the diversified Kesoram Industries," he confirmed.

There are 15 small companies under Mr B.K. Birla's fold for which the succession plan has not yet been made. "Plans for smaller companies would be chalked out in the course of time."

The management control for the education, art and religious trusts, however, is slated to be divided among Mr Birla's daughters.

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