Kilburn to rework alliance with Pitney

The B M Khaitan group office automation outfit, Kilburn Office Automation Ltd., is reworking its relation with its erstwhile associate Pitney Bowes Inc of USA.

Kilburn is entering into an interim service arrangement with the wholly owned subsidiary of Pitney Bowes, Pitney Bowes India (P) Ltd.

Sources close to the group informed that the arrangement between Pitney and Khaitans might go beyond just service contract in future.

Meanwhile, the holding of the B M Khaitan group in Kilburn Office Automation will come down by more than 7 per cent following the conversion of IDBI loan into equity.

Khaitans control Kilburn Office through group companies like Williamson Magor, Eveready Industries, Shree Durga Agencies and Nirvan Commercial Company.

B M Khaitan group currently has around 64.23 per cent stake in Kilburn Office.

It will come down to 57 per cent after the conversion. The company has convened an extra ordinary general meeting on March 21 for the loan conversion.

According to sources, Kilburn Office and Pitney Bowes may soon enter into a service contract for Pitney products in India. Pitney has now started marketing its office automation ranges in India through Pitney Bowes India (P) Ltd.

"Kilburn will get a service charge for maintaining as well as for giving after sale services to the customers of Pitney. It will be like an annual fee. Later on there could be some other arrangement also," sources said.

When contacted, a Kilburn official admitted that it is entering into a service agreement with Pitney but did not give details.

Incidentally, Kilburn had transferred its mailing division to Pitney Bowes India in December 2004 as a part of the process to realign the relationship.

Describing the loan conversion as a positive development for the outfit, sources said the company had availed financial assistance from IDBI in 1998.

It includes term loan and non convertible debentures (NCD) to the tune of Rs 10-12 crore.

Due to adverse market conditions, the company approached IDBI to reschedule the payment.

Accordingly, IDBI agreed for one time settlement last year.

"The company has already paid in full. Only an interest component of Rs 75 lakh will be converted into equity and will be allotted to IDBI in preferential basis," said sources.

After the allotment of equity to IDBI, its stake in Kilburn will go up to 11 per cent from present level of below one per cent.

The NBFC Peerless General holds around 2 per cent in Kilburn.

Kilburn registered a turnover of Rs 35.5 crore in 2003-04 and booked a profit of Rs 30 lakh.