Aditya Birla Group to merge ABCIL to merge with Grasim as part of recast plan

The Economic Times
12 February 2015

Mumbai: Aditya Birla Group announced a restructuring on Wednesday under which Aditya Birla Chemicals (India) (ABCIL) will merge with Grasim Industries as the group looks to consolidate similar businesses under one roof.

Under the merger proposal, the shareholders of ABCIL will get one share of Rs 10 each in Grasim for every 16 shares of Rs 10 each they hold in ABCIL, said a release from the group.

Grasim will issue 14.6 lakh new shares which will increase its share capital to Rs 93.31 crore, the release added.

The proposed merger is part of the $40billion group's attempt to transform Grasim Industries into a chemical conglomerate and fits in well with the group chairman Kumar Mangalam Birla's plans of consolidating similar businesses under one umbrella.

The group had earlier shifted the cement business from Indian Rayon to Grasim which in turn got merged with Ultratech. UltraTech is now the group's vehicle for the cement business. Similarly, its copper business of Indo Gulf got consolidated under Hindalco.

The proposed merger will consolidate Aditya Birla Group's chlor-alkali business into Grasim and strengthen its existing portfolio of viscose staple fibre, caustic soda and allied chemical busineeses, the release said.

It will also lead to geographical diversification for Grasim through an addition of ABCIL's manufacturing facilities spread across the country, according to the release.

"Grasim will be the vehicle for all chemical businesses. The merger will enable the business to capitalize growth opportunities by bringing in operational and financial synergies, backed by Grasim's strength," said Adesh Gupta, wholetime director, Grasim Industries.

Grasim is a manufacturer of caustic soda, with an installed capacity of 4,52,500 TPA. Its plants are located at Nagda in MP and a unit which was recently commissioned at Vilayat in Gujarat.