The matter has not reached its logical conclusion yet (till the time of going to press), but it is getting murkier by the day. When the Securities and Exchange Board of India (Sebi) asked the Birlas to hold on to their open offer, the Birlas moved the Securities Appellate Tribunal (SAT), but it upheld the Sebi view. Sebi said it would investigate whether the Birlas have got control over L&T. Meanwhile, L&Ts revival of its cement demerger plan added fuel to the fire, with the Birlas slapping a legal notice on L&T, stating that the move to plan a demerger should not be discussed while the open offer was technically alive. If the issue drags on, new revelations are likely in 2003, a critical year for the Birlas.
Another major event in 2002 for the Birlas was the merger of Indo Gulfs copper business with Hindalco. Indo Gulfs fertiliser business is being demerged into a separate company to be named Indo Gulf Fertilisers. The move is aimed at creating a metals conglomerate in Hindalco, while also renewing the focus on fertilisers. Hindalco and Indo Gulf will clearly play a critical role in the new year, bidding for PSU firms that will come up for disinvestment.
Indian Rayon and Industries, too, decided to demerge its insulator division and form a separate joint venture with NGK Insulators Ltd of Japan. This should take the insulator business to new heights both domestically and globally, and make it more profitable.
The group also announced the divestment of its 37.38 per cent equity stake in MRPL for an aggregate value of Rs 60 crore, representing a value of Rs 2 per share, to ONGC. This strategic decision was based on lack of a leadership position in the sector, no presence in the marketing of petroleum products and no significant synergies with other group companies.
Early this year, Grasim approved the divesting of its loss-making fabric manufacturing operations at Gwalior to Melodeon Exports Ltd and its associates. The Gwalior unit, with a book value of Rs 15 crore, will be sold for a negative consideration of Rs 15 crore.
Meanwhile, Allen Solly, the brand that introduced the Friday Dressing concept in India, introduced Allen Solly Womenswear in Mumbai. With the textile industry clearly on the comeback trail, the Birlas will have to play their cards well in order to gain from this uptrend in 2003.
On the insurance front, Birla Sun Life Insurance completed one year of successful operation. The company has completed new business with a total sum assured of Rs 1,600 crore, which was more than 120 per cent above plan, because of a high size of average premium per policy of more than Rs 15,000 per policy and an average sum assured of more than Rs 4 lakh per policy.