Bharat General, Birla Century Merger With Kesoram Okayed

At separate extra-ordinary general meetings, shareholders of Bharat General & Textiles, a subsidiary of Basant Kumar Birla's Kesoram Industries, and Birla Century Finance, approved the proposed merger of the two companies with Kesoram Industries Ltd.

However, EGM of Hindusthan Heavy Chemicals (HHC), which was called to consider the proposed amalgamation with Kesoram, was deferred by a week.

The decision was deferred at the request of National Insurance Company (NIC), which controls around 14 per cent stake in HHC. The NIC nominee said the insurance company needed a fortnight to examine the merger issue.

Unable to ignore the request, Birla announced that the EGM will be held again on Friday. Apart from NIC's 14 per cent stake, Birla holds 67 per cent in HHC. The balance is widely held.

 

Birla said today that the on-going restructuring would help the company report better performance in the future. A Rs 1345-crore diversified company, Kesoram is in the first phase of its restructuring.

It has spun off the textiles arm into a separate identity and merged two real estate firms with it. Now, the company is merging three group companies - Bharat General & Textiles, Birla Century Finance and HHC.

Earlier, speaking to shareholders at Kesoram's 82nd annual general meeting, Birla said the main task before the company was to bring down interest burden of Rs 85.74 crore. The company, he said, would do better performance if it could reduce the huge burden. Interest cost stood at Rs 85.74 crore against a gross profit of Rs 91.75 crore in the financial year ended March 31,2001.

At the AGM, Birla mentioned that the company cancelled its previous plan of hiving off the cement business. "On the contrary, we are now looking at improving the productivity of cement plants by injecting around Rs 30 crore towards capital expenditure."

The entire 11-member Kesoram board attended the AGM today. In 2000-01, Kesoram recorded a net profit of Rs 46.44 crore over a turnover of Rs 1345.43 crore. Turnover during the year grew by over 100 per cent from Rs 672.14 crore because merger of Birla Tyres with Kesoram.