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Rediff.com  » Business » Kumar Birla to inherit Century Textiles, Enka

Kumar Birla to inherit Century Textiles, Enka

February 14, 2006 13:34 IST

Birla family patriarch Basant Kumar Birla on Tuesday said two of his companies, Century Textiles and Century Enka, would go to grandson, Kumarmangalam Birla, as per his succession plan but for the time being the companies will be under his control.

"I have already worked out the succession plan for my companies and there is no confusion about it but I will continue to look after these companies till I am active," Birla told PTI in an interview in Kolkata.

The 86-year-old Birla, who is still active and regularly attends office, said Jayshree Tea and Industries would go to his daughter Jayshree and Kesoram Industries to his second daughter, Manjushree.

When asked whether induction of Kumarmangalam in Century Textlies board a few days back was part of the plan to hand over the company to the younger Birla, he said, "I wanted him to take over the company but he said he is too tied up with his own companies and wanted me to continue overseeing these companies for the time being."

Kumarmangalam, whose cement and aluminium giant Aditya Birla Group is the third largest corporate entity in the country behind Reliance and Tatas, was inducted into the Century Textiles board on February 7 amid speculation that it may be a part of the plan to merge the company with AVB to further consolidate its position as the country's number one cement company.

Birla, however, dismissed the speculation about merger emphasising that he would like Century to maintain its identity even under the control of Kumarmangalam.

"I will run the company independently till my health allows and even after that I will not like the dissolution of my company and want to see Century continuing with its identity," Birla said.

Century Textiles has substantial presence in cement with its total production around 7 million tonnes per annum and Birla also has plans of expansion with a proposed 1.5 mtpa in West Bengal.

To a query whether he has already prepared his will to ensure smooth succession, he said, "It's not required, I have told my wife, my children and other family members. Everybody knows it and there should not be any confusion about succession."

"Even if I die tomorrow, everyone will know which company will go to whom," he said.

Birla said that he had worked out his succession plan quite some time back, much before the M P Birla will controversy came to fore in July 2004.

The move to pick up controlling stake in Pilani Investments last year was part of that exercise.

The grandfather-grandson duo had joined hands in August last year to pick up nearly 29 per cent stake from other Birlas in Pilani to take their stake in the company to nearly 60 per cent.

B K Birla had bought 22 per cent stake of G P Birla-C K Birla and 7 per cent of S K Birla at a total value of around Rs 300 crores (3 billion) with the entire fund provided by Kumarmangalam.

The move was apparently aimed at protecting Century Textiles in which Pilani held more than 36 per cent while M P Birla group, currently controlled by Rajendra Lodha, has nearly 25 per cent stake in Pilani.

"Now we are not worried about the M P Birla group holding in Pilani as our holding is already around 60 per cent and I have a commitment from my brother K K Birla to sell his seven per cent stake to me later," Birla said.

"In fact, my brother told me that he wants to gift me those shares worth around Rs 100 crores (Rs 1 billion), but I told him I cannot accept such a costly gift and I told him that I will buy those shares in due course of time," he added.

Incidentally, the partition of the Birla family empire in 1986 had covered almost all the companies but only Pilani was left with its maze of cross-holdings but the will controversy in M P Birla group led to its consolidation as well.

Birla reiterated that the consolidation of stake in Pilani in his favour also confirms that all the Birla families are united in their fight against Lodha for the control of M P Birla group.

Lodha, a chartered accountant, had claimed that the M P Birla group assets worth Rs 5,000 crore (Rs 50 billion) were bequeathed to him by M P Birla's widow Priyamvada Birla who died in July 2004.

The Birla clan, however, came together to challenge the purported will of Priyamvada claiming that the entire assets should go to charities as per a purported mutual will of M P Birla and Priyamvada Birla made in 1982.

"Birla family is determined to regain the control of M P Birla group for the benefit of charities," Birla said.
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