B K Birla Group: Getting Rationale and Leaner?

By SP Tulsian & Geetanjali Kedia

B K Birla, patriarch living member of the Birla Clan, now over 94 years old, had earlier distributed his group companies, amongst his three children and their children in the recent past, as his group succession plans.

Mr. B K Birla lost his wife Mrs. Sarla Birla, last year, while they have 3 children. Ms. Jayshree Mohta is the eldest daughter, followed by Ms. Manjushree Khaitan and son Late Mr. A V Birla (father of Kumar Mangalam Birla).

Mr. B. K Birla has about 7 listed companies, which he is learnt to have distributed amongst his children and grand children as under:-

1. To his Grandson Mr. K. M. Birla, son of his Late son Mr.Aditya Vikram Birla.

i) Century Textiles and Industries Ltd.

ii) Century Euka Ltd.

iii) Pilani Investment

2. To his grand-daughter, Ms. Vidula Jalan, daughter of his daughter Mr. Manjushree Khaitan.

i) Mangalam Cement Ltd.

ii)Mangalam Timber Products Ltd.

3. To his elder daughter Ms. Jayshree Mohta.

i) Jay Shree Tea Industries

4. To his younger daughter Ms. Manjushree Khaitan

i) Kesoram Industries Ltd.

Though these 7 companies are earmarked to the family member, but the most priced project amongst all these companies are their cement projects.

Century Textile has a capacity of 13.50 million TPA, Kesoram has 7.50 million TPA, while Mangalam Cement has capacity of 3.25 million TPA. Though Century Textile has gone to K M Birla, but he wants to acquire the cement projects of 7.50 MTPA and 3.25 MTPA, held by other two companies as well.

It may be seen that these two cement projects, owned by these two listed companies, are allocated to Mother-Daughter duo, with whom K M Birla, is learnt to be in talks to acquire these projects, as both the ladies are not seen too keen in running these cement plants.

Kesoram Industires having agreed to divest its Tyre unit of Haridwar, to JK Tyre, for about Rs.2,200 crores, is seen a precursor to this exercise, as well.

It is also learnt that though Century Textile has gone to the fold of K M Birla, but its paper plant at Nainital is looked after by Mrs. Manjushree Khaitan, who is learnt to be the de-facto owner of Kesoram Industries.

Ironically, shareholding of these two companies are entangled with other group companies, which are now owned or will be owned by K M Birla.

Of promoters stake of 48% in Kesoram Industries, Pilani Investment holds 25%, while Century Textile hold 5%.

Of promoter stake of 28% in Mangalam Cement, Kesoram holds 14%, Century holds 8% and Pilani Investment holds 4%.  So, legal ownership of these two companies viz. Kesoram and Mangalam Cement are with K M Birla, while these two companies are learnt to have gone to Ms. Manjushree Khaitan and her daughter Ms. Vidula Jalan, as stated above.

Since K M Birla has strong appetite for the cement plants and also has ambitions plans to raise the capacity of Ultratech Cement to 100 million TPA soon, he will be keen and is learnt to be negotiating hard and fast, to buy out these two companies as well, from Ms. Manjushree and Ms. Vidula.

Insiders are also expecting to see Centrury Textiles exiting from its paper business, for which advanced negotiations are being held with an FMCG giant, having big presence in cigaratte and paper, for over Rs.3,200 crores.

If this happens, B. K Birla family is expecting complete family settlement amicably, which is also the wish of patriarch Mr. B.K. Birla.

To put it in a gist, look for speedy corporate developments in these 3 companies - Century Textiles, Kesoram and Mangalam Cement - which may also see huge value unlocking going ahead.