Birla Corporation, the MP Birla group flagship, has decided to scale up production to 30 million tonnes despite the din around the company’s ownership and management.
Addressing shareholders at the 101st annual general meeting of the company, Harsh Vardhan Lodha, chairman of Birla Corp, said: “After commissioning the Mukutban plant which will take our capacity to 20mt, we will embark on the next phase of growth.
“We had earlier stated that your company is looking to scale up its production capacity to 25mt by 2025. Plans are afoot to grow further and keep a target of 30mt by 2027 without compromising on the financial prudence as has always been our policy.”
Birla Corporation’s present production capacity stands at 15.6mt, which will go up to almost 20mt by the end of the current fiscal year, when its greenfield 3.9mt plant at Mukutban, near Nagpur, is commissioned.
Lodha’s comment indicates Birla Corp would be cautious in taking on fresh loans to fund the next phase of expansion, the details of which would be announced after the company’s board approves it.
Mukutban’s expansion will cost more at Rs 2,744 crore (against Rs 2,450 crore estimated originally) because of Covid-related delays. Some of the adverse impact will, however, be blunted by the reduction in the interest cost.
Birla Corp took advantage of a lower interest cycle to refinance and renegotiate loans worth almost Rs 1,800 crore, bringing down the borrowing cost from an average cost of 9.26 per cent to 7.83 per cent.
This substantial reduction of 143 bps, coupled with a cut in the gross borrowings, has helped the company maintain a healthy net debt to EBITDA ratio, Lodha said.
The AGM, which took place in the virtual mode, barely lasted 90 minutes. While nearly all shareholders praised the Lodha-led board and the management, there was only one discordant note.
The resolutions put to vote included one to ratify the appointment of Arvind Pathak as the managing director and CEO of the company. Shareholders were also asked to vote on a resolution to appoint Rameshwar Singh Thakur as a director on the board.
The Lodha-led board has strongly recommended voting against Singh’s resolution, put forward by The Punjab Produce and The Trading Co Ltd, a promoter group entity which is now under effective control of the committee of administrator pendente lite (APL Committee).
The committee, which was appointed to oversee the estate of Late Priyamvada Devi Birla, wife of late Madhava Prasad, had pushed similar proposals in three other companies of MP Birla Group. They were all subsequently defeated. Voting results of Birla Corp AGM will be known on Thursday.
The crossfire over resolutions underscores the challenges before Birla Corp and M.P. Birla Group to continue with the business as usual, when the ownership and control continue to be debated and challenged in the courts of law.
Lodhas took reign of the Group after Priyamvada bequeathed her asset to late Rajendra Singh Lodha, Harsh’s father, by a will in 2004. Birla family has challenged the will and the two sides are in constant state of legal war ever since, with the AGM’s opening another front.
