The Hindu : Business : Citibank, others in race to finance Birla deal

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Tuesday, Aug 09, 2005

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Citibank, others in race to finance Birla deal

Special Correspondent

Pilani Investment share price fixed at Rs. 1,500; `no link with Lodha case'

KOLKATA: A number of banks, including Citibank, are in the race to part-finance the Birla family deal on the Basant Kumar-Kumar Mangalam Birla combine, acquiring a majority stake in Pilani Investment and Industries Corporation (PIIC) Ltd. The cost of the deal involving two family members — G. P. Birla and S. K. Birla — divesting their stake totalling 29 per cent in favour of B. K. Birla is being pegged at over Rs. 300 crore. The share price was fixed at Rs. 1,500 apiece.

The deal is proposed to be financed through a mix of loans and internal generation. Talking to The Hindu at the group's corporate headquarters here, Mr. B. K. Birla said although in 1986, the assets of India's first corporate family were redistributed, the crossholding at PIIC was pending.

"Now it has been settled by the whole family amicably." With this deal, inked here last week, the holding of Mr. B. K. Birla and his grandson, Kumar Mangalam would increase to about 51 per cent from 22 per cent held earlier.

PIIC is a holding company with stakes across a gamut of Birla companies controlled by various groups. These include Indian Rayon, Bihar Caustics, Century Textiles, Grasim Industries, Hindalco, Kesoram, Orient Paper and Zuari Industries. It also holds 45 lakh shares of Tata Steel.

With this deal, while the B. K. Birla-Kumar Mangalam group would have the single largest holding, K. K. Birla would continue to retain his stake.

While he had offered his holding of about five per cent to Mr. B. K. Birla as a gift, the latter declined the offer saying: "I can take an expensive watch as a gift but nothing that is valued at about Rs. 100 crore."

Indications were that the shares were available whenever the B. K. Birla group decided to acquire it.

Mr. Birla refuted any links between this consolidation exercise and the ongoing battle with their once-trusted friend Rajendra Singh Lodha over the assets of late widow of M. P. Birla.

"We hope to settle that matter in the courts," the octogenarian said.

"It may be mentioned here that the M. P. Birla group holds 25 per cent share in the Rs. 7.90 crore paid-up equity of PIIC. There is a 11.3 per cent public holding in PIIC which ended 2004-05 with a Rs. 23 crore profit from operations, dividend and rent income.

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