Aditya Birla Nuvo to merge with Grasim Inds; fin services of combined entity to align with ABFSL

New Delhi: In yet another consolidation exercise, the $41 billion Aditya Birla Group plans to merge group firms Aditya Birla Nuvo Ltd and Grasim, and hive off financial services business into a separate entity, which will be listed later. The boards of Aditya Birla Nuvo Ltd (ABNL) and Grasim Industries Thursday approved a composite scheme of arrangement between the two firms and Aditya Birla Financial Services Ltd (ABFSL), a wholly-owned arm of ABNL. [caption id=“attachment_2619644” align=“alignleft” width=“380”]  Kumar Mangalam Birla, Chairman of Aditya Birla Group. Reuters[/caption] As per the scheme, ABNL will merge with Grasim and after the merger, the financial services business of the combined entity will be hived off and merged with ABFSL, whose shares will consequently be listed. In a BSE filing, ABNL said the move is “aimed at creating one of India’s largest and well-diversified companies with a combination of cash generating and high growth businesses.” The scheme will be subject to requisite approvals from shareholders, creditors, High Courts and regulatory authorities, ABNL and Grasim said in separate regulatory filings. ABNL has interest in financial services (Aditya Birla Financial Services), telecom (Idea Cellular), textiles and fertilisers, along with new ventures such as payment banks and solar power through various entities. Grasim on the other hand has presence in cement, chemicals and viscose staple fibre businesses. In 2015-16, ABNL had posted revenue of Rs 5,466.45 crore with a net profit of Rs 360.02 crore, while Grasim Industries revenue was at Rs 8,979.60 crore with a net profit of Rs 953.27 crore. Last year, the Aditya Birla group had consolidated its apparel businesses into then Rs 5,290 crore entity named Aditya Birla Fashion and Retail (ABFRL). Under the scheme, the apparel businesses of group holding company Aditya Birla Nuvo (ABNL) and of another group firm Madura Garments Lifestyle Retail Company Ltd (MGLRCL) were demerged into listed firm Pantaloons Fashion & Retail Ltd (PFRL), which has now been renamed as Aditya Birla Fashion and Retail. The group also said Grasim’s board has recommended sub-division of its equity shares of Rs 10 each into five equity shares of Rs 2 each. The exchange ratio as stated above would be adjusted accordingly to take into account the effect of such sub division. “This merger provides the shareholders of Grasim with exposure to fast growing sectors, including telecom and financial sectors,” Grasim Managing Director Dilip Gaur said. ABNL Managing Director Lalit Naik said the transaction provides significant benefits to the company’s shareholders through direct exposure to seasoned, strong cash flow generating businesses. “Further, shareholders will benefit from a larger free float and better liquidity of the combined company,” he added. The merger scheme will be subject to requisite approvals from shareholders, creditors, high courts and regulatory authorities, ABNL and Grasim said in separate regulatory filings. ABNL has interest in financial services (Aditya Birla Financial Services), telecom (Idea Cellular), textiles and fertilisers, along with new ventures such as payment banks and solar power through various entities. Grasim has presence in cement, chemicals and viscose staple fibre businesses. Last year, the Aditya Birla group had consolidated its apparel businesses into then Rs 5,290 crore entity named Aditya Birla Fashion and Retail (ABFRL). Under the scheme, the apparel businesses of group holding company Aditya Birla Nuvo and of another group firm Madura Garments Lifestyle Retail Company Ltd (MGLRCL) were demerged into listed firm Pantaloons Fashion & Retail Ltd (PFRL), which has now been renamed as Aditya Birla Fashion and Retail.