Pilani Investment and Industries Corporation shareholders awaiting listing on premier bourses

12 Oct, 2011, 07.28AM IST,

MUMBAI: Minority shareholders owning shares - largely inherited from the earlier generation - in Pilani Investment and Industries Corporation, a storied BK Birla Group investment company, are hoping the much-awaited listing on India's premier bourses will kick off a price discovery process allowing them to unlock value.

The investment firm, which was one of the flagship holding companies of the undivided Birla Group during the times of GD Birla, the legendary founder of the business empire, holds almost 37% of Century Textiles and smaller stakes in companies such as Hindalco and Grasim, two leading companies of the Aditya Birla Group.

Its shares are slated to be listed on the National Stock Exchange (NSE) during Moorat trading, the traditional ceremony of token stock trading done on the auspicious occasion of Diwali, sources say.

At least five minority shareholders that ET spoke to - with shareholding ranging from about 4% in Pilani to a measly 12 shares in the company - expect a more accurate valuation of their shares when the firm gets listed on the Bombay Stock Exchange and National Stock Exchange.

Pilani Investment, currently listed on the Delhi and Madhya Pradesh Stock Exchanges, is traded mostly in off-market deals, where price determination is more arbitrary.

Pilani shares going for Rs 2,000 apiece

Pilani shares are now changing hands at about Rs 2,000 apiece, say traders dealing in shares. Among the minority shareholders, the largest is Pavankumar Sanwarmal, who is said to own around 4% in Pilani. Sanwarmal declined to comment when ET contacted him on his ownership of Pilani shares. Sources close to Sanwarmal say he has been giving BK Birla the proxy voting rights for the shares held by him and that he enjoys a cordial relationship with Birla executives.

Other minority investors such as Rajendra Gandhi, who own around 250 Pilani shares, say they have been holding it for too long - since 1990 - and are looking to cash out as soon as the scrip is listed. "We expect it would be at least Rs 3,000 a share or more, once it is listed in Mumbai," Gandhi said. Most minority shareholders have come to own Pilani by virtue of their inheritance and since it pays a decent dividend of 250%, none of them is in a hurry to dispose of the family heirloom, unless the market gives them a good price. At Rs 2,000 apiece in the grey market, Pilani's market capitalisation will be Rs 1581.75 crore.

The unquoted shares and the real estate such as the Birla Buildings are pegged at book value much lower than what they would fetch if sold. For example, the Birla Buildings in Kolkata are valued at a mere Rs 1.52 lakh. It also owns mutual funds that are valued at Rs 670.11 crore as on March 31, 2011. Pilani's net profit was Rs 43.91 crore for the period ending March 31, 2011, compared toRs 46.75 crore in the previous year. The two Birlas on the board of Pilani are Basant Kumar Birla and his grandson Kumar Mangalam Birla, the promoter of the Aditya Birla Group.