K M Birla consolidates group companies under Birla Group Holdings

Resulting consolidation would grant BGH a substantial stake in major group entities like Hindalco, Aditya Birla Capital

In an unprecedented initiative by the Birla group, Kumar Mangalam Birla is consolidating group investments/holding companies under some heads with plans to merge Trapti Trading, TGS Investments, Turquoise Investments and Finance, and some other entities with Birla Group Holdings (BGH).

The resulting consolidation would make BGH a substantial stake holder in major group entities like Grasim, Hindalco, Aditya Birla Capital, Century Enka, Aditya Birla Fashion and Retail – which otherwise were divided between smaller firms. According to disclosures made by different Aditya Birla Group firms, the NCLT approved the amalgamation of TGS, Trapti, Turquoise, Gwalior Properties, BGH Exim and Seshasayee Properties with BGH late in June. When contacted, a spokesperson for the Birla group said that whatever they have to say is in the stock market disclosure.

The merger of some investment companies with BGH will lead to a significant consolidation of the holdings of the Birla A V Group (Aditya Vikram) firms in BGH. Trapti, TGS and Turquoise taken together have more than 18% in Grasim. BGH, too, has around 0.83% in the textile giant. Then, after the merger, BGH will have about 19% in the firm.

The entire promoter holding of A V Birla Group in Grasim is a little over 40%, thus, following the merger, BGH will hold a majority of the 50% of promoter holding in the company. Whereas in Hindalco, the group has 34.66% stake, while the investment companies have close to 10% stake. Additionally, these investment companies have close to 23% in Aditya Birla Retail, where the promoter holding is more at 59.01%.

Like BGH, a major corporate company, the Singhanias had earlier consolidated their holdings in fewer companies – setting a corporate finance consideration of limiting the number of group companies and their assets.