Murugappa group consolidates stakes in 3 cos.

By Our Special Correspondent

CHENNAI, MARCH 27. Moving decidedly towards a holding company- type model, city-based the Rs. 3,100-crore Murugappa group has completely eliminated cross-holdings and consolidated its stakes in three of its major companies.

The three companies in which cross-holdings have disappeared completely are: Tube Investments of India (TII), EID Parry and Carborundum Universal (CUMI). In Cholamandalam Investment & Finance Company Ltd. (CIFCO), however, it has managed to reduce it substantially.

The cross-holdings are bought by New Ambadi Investments Private Ltd. on behalf of four trusts (Murugappa Group Equity Investment Trust I, II, III & IV). In all, it has cost the trustee - New Ambadi Investments Private Ltd.- Rs. 64.40 crores to complete the acquisitions. The shares have been bought at a `fair price' determined by ICICI Securities (I-SEC).

The trustee has bought 18.75 lakh shares in EID at a cost of Rs.23.26 crores, around 9.75 lakh shares in TII at Rs. 8.98 crores, about 14.89 lakh shares in CUMI at Rs. 18.02 crores and nearly 41.30 lakh shares in CIFCO at Rs. 14.17 crores.

In CIFCO, however, Parry Agro Industries Ltd., a group outfit, has bought the remaining cross-holdings by shelling out Rs. 9 crores. Thus, there has been only a partial consolidation of cross-holdings.

The elimination of cross-holdings in major companies comes close on the heels of the owners' move to professionalise the group in the wake of emerging trend in the corporate world and following recommendations by consultant McKinsey.

The elimination of cross-holdings in these companies is expected to go a long way in beefing up the finances of group firms which have divested their holdings and generally help improve the shareholder value.

A release from the group quoting its Chairman, Mr. M.V. Subbiah, said ``the group has been engaged in an accelerated programme of modernising and reinventing itself. This year we have set up a group level supervisor body, the Murugappa Corporate Board, where we have invited independent members...''

Outsiders like Mr Marti G. Subrahmanyam of New York University and Mr. Natalino Duo, Managing Director of DCM Benetton India Ltd., have already joined the group board as independent members.

Senior members of the family have become mentors of varied group companies and have vowed to focus on building excellence in functional areas.

Sources aver that the group will gradually take steps to clear cross-holdings in other companies like Coromandel Fertilizers Ltd. and Parrys Confectionery Ltd.

The group in the meantime is on the look out for a buyer for its prodorite unit, a division spun off recently from Coromandel Engineering. It is reported to have finalised a suitor for the granite division. That leaves only the property business. Efforts are under way to find a buyer for this as well.

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Section  : Business
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