Aditya Birla Nuvo to merge into Grasim

In a major corporate restructuring exercise, the $41 billion Aditya Birla Group has decided to merge the $3.6 billion Aditya Birla Nuvo (ABNL) into the $5.6 billion Grasim Industries.
 
Further, upon implementation of the merger, financial services of the merged entity will be demerged to a listed financial company in the first quarter of next financial year, Kumar Mangalam Birla, chairman of Aditya Birla Group said at a press conference in Mumbai today.
 
While Grasim's businesses are mainly in manufacturing like cement (Ultratech), chemicals and viscose staple fibre, ABNL has under its fold financial services business, telecom company Idea Cellular  and businesses like linen, agri, rayon and insulators, besides clearances to set up a payment bank in joint venture with Idea Cellular.
 
"The proposed restructuring will create one of India's largest well diversified companies with a healthy mix of businesses with steady cash flows and long term growth opportunities", said Birla. The demerger and listing of the financial services will unlock value for shareholders, he said.
 
While Dilip Gaur, managing director of Grasim felt the merger would provide the shareholders exposure to fast growing sectors like telecom and financial services, Lalit Naik, ABNL Managing Director said the deal would provide direct exposure to seasoned, strong cash flow generating businesses.
 
Reacting to questions on whether the merger was a ploy to beef up the leveraging capabilities of Idea Cellular to counter the proposed big launch of Reliance Jio, Kumar Mangalam Birla said Idea Cellular is a separate company and it would  have its own fund raising plans for expansion.
 
The officials said currently Grasim has a cash balance of Rs 460 crore and ABNL has debt of Rs 2,000 crore, which is a very healthy balance sheet.