Indo Gulf, Birla Global to merge with Indian Rayon

The Rs 33,000 crore Aditya Birla Group has decided to merge its group companies Indo Gulf Fertilisers and Birla Global Finance with Indian R...

The Rs 33,000 crore Aditya Birla Group has decided to merge its group companies Indo Gulf Fertilisers and Birla Global Finance with Indian Rayon. After the merger, Indian Rayon will be rechristened Aditya Birla Nuvo, and will have consolidated revenues, including that of arms, of Rs 6,000 crore in fiscal 2005-06.

The group has announced a swap ratio of 1:3, under two separate recast schemes. This will mean that shareholders will get one share of Indian Rayon for every three shares of either Birla Global Finance or Indo Gulf Fertilisers.

Aditya Birla Group Chairman Kumar Mangalam Birla announced the merger on Sunday after the boards of the three companies met to finalise the restructuring plan. Aditya Birla Nuvo’s consolidated sales as on March 31, 2005, when restated with the results of the two merging companies, will be in excess of Rs 3,980 crore.

Story continues below this ad

Promoters will have a 38 per cent stake in the merged entity followed by banks and institutional investors 22 per cent, FIIs/GDRs 15 per cent and others — including the public — 25 per cent.

Revenues from the ‘value businesses’, including VSF (viscose staple fibre), textiles, carbon black and insulators, will be channelised to fund ‘high growth businesses’, said Sanjeev Aga, MD, Aditya Birla Nuvo.

The financials of the new company will give it a significantly higher borrowing capacity, Aga added. The merged company will also be an integrated financial services company. New opportunities in financial services like pension funds, high-end insurance products and asset management can be explored. The group may also foray into banking, once the regulations permit, Birla added.