| This one isn't giving
the Birlas any sleepless nights. They don't seem particularly worried
about the prospect of R.S. Lodha ending up with a 25 per cent block
of shares in Pilani Investments, erstwhile holding company of the
once undivided Birla Group, if he succeeds in wresting control of
Priyamvada Birla's estate.
"What can Lodha do with 25 per cent?" asks a Birla insider
combatively. "The Birlas still hold more than 60 per cent.
As the non-family shareholders will definitely back the promoters,
he can't even block special resolutions. So the question of him
grabbing a seat on the board doesn't arise."
Sources close to the family say Pilani's importance has waned.
"Over the years, the Birlas have managed to disentangle their
maze of cross-holdings in each others' companies," a highly
placed source says.
Except for B.K. Birla flagship Century Textiles & Industries
Ltd where Pilani holds a 36 per cent stake, its shareholdings in
other group companies aren't big enough for it to play spoiler.
For example, it holds about 5 per cent each in Grasim Industries
Ltd and Kesoram Industries Ltd, 2.5 per cent in Hindalco. It also
owns small stakes of 1-2 per cent in a host of other Birla companies
like Zuari Industries Ltd, Jayshree Tea & Industries Ltd, Cimmco
Birla Ltd and other listed and unlisted companies. "These stakes
are too small for anyone to be able to do anything with them,"
a source says.
Miniscule and dispersed, they may be, but the holdings are still
worth a fortune. According to a family member, the quoted price
of the shares alone add up to about Rs 1,400 crore. "Since
the shares of several companies like Century, Cimmco and Zuari are
undervalued, the intrinsic worth of Pilani is a lot more,"
he says. Some estimates place the value of Pilani's holdings in
listed and unlisted companies at more than twice the official figure.
That means Lodha, if he gets M.P. Birla's 25 per cent, would be
richer by Rs 350-700 crore on the Pilani shareholding alone. But
he may find it difficult to cash out. The Birlas have made it clear
that they're in no mood to buy him out. And with no hope of gaining
control-and little opportunity to exit-outside investors are unlikely
to be interested.
So, in the case of Pilani at least, it seems Lodha-assuming he
wins- will just have to remain satisfied being the paper owner of
a huge mountain of wealth.
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