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BK Birla group mulls ten firms merger

Kausik Datta

The Rs 50-billion B K Birla group has embarked upon another restructuring plan, which aims at merging over 10 closely held group companies with three main money spinners.

"The merger would enhance the shareholders' value by bringing these closely held companies under the umbrella of the listed firms," group patriarch Basant Kumar told Business Standard. The proposed merger would also help the group save energy and time by eliminating paperwork, he added.

He said the merger would be designed in a manner that the group as a whole would be able to generate more business. As the group has no plans to take up fresh capital expenditure in any firm, change in the product mix and business portfolio was required to generate more revenue, he added.

According to sources close to the group, the three companies with whom the closely held companies will be merged are expected to be Century Textiles & Industries- the jewel in the Birla crown,Kesoram Industries and Jay Shree Tea & Industries. The octogenerian Birla, however, declined to name these companies as the proposal was yet to be cleared.

In the first phase of restructuring, consolidation of group companies had been kicked off with the announcement of merger of three companies, namely Bharat General Textiles & Industries, Hindusthan Heavy Chemicals and Birla Century Finance, with Kesoram Industries last month, Birla said.

He said the group was not in favour of realignment of companies based on operations. For instance, the group does not believe that bringing together the cement business under one roof will help. The group runs cement business under different companies such as Century Textiles, Kesoram and Mangalam Cements.

According to Birla, the group has postponed its previous decision of selling Manikgarh cement plant due to "lack of proper response from buyers". The Manikgarh plant was put on the block last year. The idea was to use the sale proceeds for partial repayment of Century Textiles' loans to financial institutions. The plant is under Century Textiles.

The prominent B K Birla group companies are Century Textiles, Kesoram Industries, Jay Shree Tea & Industries, Mangalam Cements, Mangalam Timber Products, ECE Industries, Manjushree Plantations, Bharat Commerce & Industries and Century Enka.

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