B.K. Birla: Tighten control

Calcutta, June 27: B. K. Birla is keen to increase promoters’ stake in group companies to around 50 per cent over the next few years.

“In the long term, it is advisable that promoters hold half of the company’s total equity base. I have already advised my officials to start the exercise in all the companies where promoters’ holding is much lower,” B. K. Birla said today on the sidelines of the annual general meeting of Century Enka, a group company.

The promoters’ stake will have to be raised in a phased manner.

“Following the Sebi rule, we can raise 5 per cent a year,” Birla said.

According to filings with the Bombay Stock Exchange, the promoters (Birla family and group firms) held 26.36 per cent in flagship firm Kesoram Industries as on March this year.

Promoter holding in Century Textiles & Industries is 40.32 per cent, Century Enka 24.50 per cent, Mangalam Cement 27.07 per cent, Mangalam Timber 32.34 per cent, Jay Shree Tea 41.86 per cent and ECE Industries 37.88 per cent.

“We will first raise our holdings in the companies where promoters hold around 25 per cent. Our target is to increase the holding to around 40 per cent in three years,” Birla said.

The Birla family and the Tatas had in the past been operating with very low promoter holding. But the economic liberalisation of the nineties changed that. Worried about takeover threats, promoters, with low equity holding, began raising their stakes.

With the stock markets off their highs, promoters are now cashing in on the opportunity to raise their holding.

Earlier this month, B.K. Birla and his wife Sarla Birla bought shares in Kesoram Industries in their individual capacities.

B.K. Birla bought 7,400 shares and his wife purchased another 5,300.

B.K. Birla also bought 5,000 shares in Century Textile & Industries Ltd.