Kumar Mangalam Birla has taken the first major step towards untangling the cross-holdings in his group's manufacturing companies.

Group majors Hindalco, Grasim and Indian Rayon on Tuesday informed the Bombay Stock Exchange they had sold their combined stake of almost 30 per cent in group firm Indo Gulf Fertilisers to TGS Investments, a closely held investment arm of the Birla family.

The shares have been sold at Rs 75 each in the open market, and at the same price at which TGS had recently made a 20 per cent open offer to Indo Gulf shareholders. The offer opened on July 31 and closes on August 29.

TGS had also named Grasim and Indian Rayon as persons acting in concert for the open offer, but the two companies would no longer participate in the offer, Birla sources said. None of the three group majors is left with any Indo Gulf shares now.

The Birlas currently hold 39.65 per cent in Indo Gulf Fertilisers.

Hindalco and Indian Rayon each held a 8.68 per cent stake in Indo Gulf, for which they will get Rs 29.37 crore (Rs 293.7 million) each. Grasim had a 12.26 per cent stake in Indo Gulf, for which it will receive Rs 41.46 crore (Rs 414.6 million).

The total outgo for TGS will be around Rs 100 crore (Rs 1 billion). It is expected to pay another Rs 67 crore (Rs 670 million) to Indo Gulf shareholders if the open offer is fully subscribed.

Birla group executives confirmed that the divestment process was not a part of the ongoing open offer announced for Indo Gulf.

Though the Birlas had been working on a plan to untangle the cross-holdings for over four years now, the process had been delayed by various tax problems.