rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » Kumar Birla to get Kesoram Industries

Kumar Birla to get Kesoram Industries

June 28, 2007 11:36 IST
Basant Kumar Birla, chairman of the Rs 8,000-crore (Rs 80 billion) BK Birla group, has altered his succession plan and at the hub of the change is the Rs 2,500-crore (Rs 25 billion) diversified company Kesoram Industries.

Birla, 87, told the media today after the annual general meeting of Century Enka that he would bequeath all major companies of his group, including Kesoram Industries, to his grandson and Aditya Birla group chairman Kumar Mangalam Birla. Under the earlier succession plan, Kesoram was supposed to go to his younger daughter, Manjushree Khaitan.

Although BK Birla declined to explain why he changed his plans, it is believed that the reason is the synergies between the cement businesses of Kesoram and Kumar Mangalam's companies Grasim and Ultra Tech.

Half of Kesoram's revenue (Rs 1,156 crore or Rs 11.56 billion) comes from cement, where the alignment with Kumar Mangalam will make a big difference for the company.

The BK-Kumar Mangalam combine is the country's largest cement player, marginally ahead of closest rival, the ACC-Gujarat Ambuja combine. They hold 37 million tonnes capacity.

Kesoram has the capacity to produce 2.9 million tonnes of cement. Tyres constitute its other major business, accounting for revenues of Rs 1,112 crore (Rs 11.12 billion). The company posted a net profit of Rs 266 crore (Rs 2.66 billion) last year. BK Birla described Kesoram as a "giant company," the second largest in his portfolio after Century Textiles.

However, there is no change in the succession plan for Jay Shree Tea and Industries. His elder daughter Jayshree Mohta is on the board of Jay Shree Tea and Industries and she will inherit the company.

Manjushree Khaitan will inherit Manjushree Plantations. "I may give her something else also," Birla said. Manjushree's daughter Vidula is on the board of Mangalam Timbers.

According to a will made by BK Birla in July 2004, a company would be inherited by the person who was in charge of it and overseeing its day-to-day affairs.

The same formula was also adopted when the Birla clans — Basant Kumar and his brothers Krishna Kumar, Ganga Prasad and nephew Sudarshan Kumar — separated the family's business after the death of Ghanshyamdas Birla.

Under the formula, Manjushree Khaitan and Jayshree Mohta were to get Kesoram Industries and Jay Shree Tea and Industries, respectively.

Last year, Kumar Mangalam joined the Century Textiles board after gaining control over the Birla group's investment arm, Pilani Investments. Pilani holds the largest stake in Century Textiles.

Apart from Kesoram and Century Textiles, Kumar Mangalam will also get Century Enka. The other companies in the BK Birla portfolio are Mangalam Cement, ECE Industries and Mangalam Timber Products.

However, Kumar Mangalam will not take charge of these companies immediately. Birla said Kumar Mangalam would like him to continue to serve as chairman of these companies, as long as he was active.

BK Birla had earlier told Business Standard that Kumar Mangalam Birla would also inherit nearly 15 charitable trusts that run 16 schools and educational institutes across the country and the Birla Academy of Fine Arts in Kolkata. The trusts also look after BK Birla's interests in a host of unlisted companies.

Kumar Birla will also inherit a part of his grandfather's rich collection of paintings. He has a collection of 5,000 artworks including caricatures, Kalighat pata and the paintings of Rabindranath Tagore and Abanindranath Tagore.

BS Reporter in Kolkata
Source: