Birlas target Pilani consolidation

Sources in the Birla family said the entire cross-holdings of the Birla family will be consolidated under Kumar Mangalam Birla, Chairman of Aditya Birla group with his grandfather Basanth Kumar Birla leading the negotiations with other family members in Kolkata. B.K. Birla owns 30 per cent stake in Pilani, while C.K. Birla — owner of Hindustan Motors — holds another 25 per cent in Pilani. Sudarshan Kumar Birla owns 10 per cent stake.

‘‘Within 1 or 2 years we will have to consolidate our stake in Pilani. B.K. Birla is holding discussions with other family members,’’ a family source told this newspaper. ‘‘No valuation is on at present but sooner or later we will have to get over with it. We do not want next generation to have a problem over the ownership issues,’’ the source said.

Pilani Investments owns shares in most of the Birla group companies including in many Aditya Birla group companies. For example, Pilani has a 36.39 per cent stake in Century Textiles, 4.69 per cent stake in Grasim Industries and 2.45 per cent in Hindalco. The shareholding in Aditya V. Birla companies and B.K. Birla’s flagship Century makes it more important for K.M. Birla to get hold of the Birla empire’s oldest investment vehicle.

The Birla family elders led by B.K. Birla (84) and G.P. Birla (82) are expediting the consolidation process mainly as an ‘outsider’ R.S. Lodha managed to get a foothold in Birla investment company by getting the 25 per cent shares belonging to late Priyamvada Birla (wife of M.P. Birla). ‘‘They (the elders) want to do it (the consolidation) before their eyes,’’ sources add.

‘‘Family elders were quite saddened by the Lodha affair. Though we kept hearing that the old guard was being replaced by Lodha’s men in the last four to five years in M.P. Birla group companies, we could not do anything as Lodha was co-chairman,’’ he said.

‘‘We do not want Lodha to become a beneficiary of the M.P. Birla empire though we did not mind him as a trustee,’’ sources add.

In fact, sources say one of the family’s oldest member B.K. Birla is now giving final touches to his own empire. While Kumar Mangalam is set to get the Rs 2,370-crore Century Textiles — provided he buys Pilani, which holds 36 per cent stake in Century — BK’s daughters’ will get Kesoram and Jaishree Tea.

Three of BK’s companies will be put on the block. ‘‘As far as we know Mangalam Cement, ECE Industries and Mangalam Timber from the B.K. Birla group will be sold out as they have turned uneconomic,’’ the source said.

For the fiscal ended March 2004, Pilani earned a net profit of Rs 18.59 crore from dividend, rentals etc and distributed dividend of 8.49 crore among its investors at the rate of Rs 12 per share.

Meanwhile, R. S. Lodha on Wednesday sought initiation of suo moto contempt proceedings against the Birlas for allegedly trying to disrupt the proceedings of the probate matter by filing cases in different courts against him.