Birlas invest Rs 1,450 cr more in unlisted private entity Essel Mining

Funds have been used to invest in Vodafone Idea rights issue

The Birlas have infused Rs 1,450 crore more in their unlisted private entity Essel Mining, which in turn, has made various strategic investments in different Aditya Birla group companies. The investments are in firms such as Vodafone Idea, Hindalco Industries, Grasim Industries, Aditya Birla Fashion and Retail.

The investments in Aditya Birla group entities have been made via IGH Holdings, a wholly-owned subsidiary of Essel Mining, which is holding shares in these companies.

According to a banking source, Essel Mining’s financial performance has improved in fiscal 2019 with the start of operations at Jilling mines in March last year. From a net loss of Rs 1,726 crore in fiscal 2018, the company made a profit of Rs 1,385 crore for the fiscal 2019. The company also clocked an operating income of Rs 3,480 crore in fiscal 2019 compared to Rs 932 crore reported in fiscal 2019 on a stand-alone basis.

“The Birla group had to invest a sizeable amount in Vodafone Idea rights issue to retain its stake in the company,” said a banker.

The investments were made just after the group decided to merge its several private investment companies into Birla Global Holdings — which now holds almost 50 per cent of promoter stake in various Birla group listed companies. The merger of these investment companies were undertaken so as to consolidate promoter stake in one company and avoid multiple layering, as desired by the RBI, for core investment firms.

Essel Mining, which was hit by cancellation of mines, is now targeting the renewable energy sector by investing in the wind and solar power sector in a big way. A banker said the firm has signed a power purchase agreement with the Maharashtra State Electricity Distribution Co for wind and solar power contracts.

The company has also entered into PPAs with Telangana State Southern Power Distribution Co, Gujarat Urja Vikas Nigam, NTPC Vidyut Vyapar Nigam and Rajasthan Renewable Energy Co.

In January this year, Essel Mining also acquired Pro Minerals Pvt (PMPL) for Rs 280 crore after the latter was put for auction by lenders after it failed to repay dues. Essel has promised to invest an additional Rs 130 crore in capital expenditure. Pro Minerals has a one million tonne plant in Odisha.