Grasim Industries Ltd’s Board of Directors has approved the proposed merger of Grasim and Aditya Birla Chemicals (India) Ltd (ABCIL), part of the Aditya Birla Group.
Grasim is a leading manufacturer of caustic soda in India, with an installed capacity of around 452 500 tpy. It operates plants in Nagda (Madhya Pradesh) and Vilayat (Gujarat). Caustic soda is used in the production of viscose staple fibre, one of Grasim’s key business areas. ABCIL specialises in chlor-alkali, with three production facilities and an installed capacity of approximately 293 000 tpy of caustic soda. ABCIL also comprises a 110 MW captive power plant.
The merger plans are in line with Aditya Birla Group’s strategy of unifying similar businesses in one company. The merger is expected to allow for the consolidation of Aditya Birla Group’s chlor-alkali business into Grasim, thereby strengthening the company’s portfolio of viscose staple fibre, caustic soda and allied companies. Further proposed advantages include greater geographical diversification for Grasim, and the ability to capitalise on growth opportunities as a result of financial and operational synergies.
The swap ratio approved by the Board is one share of Rs.10 each of Grasim for every 16 shares of Rs.10 each of ABCIL. Grasim will issue 14.62 lakh new shares, which will increase its share capital to Rs.93.31 crore.
The proposed Scheme of Amalgamation will be subject to the approvals of the High Court, Competition Commission of India, Stock Exchange, Shareholders and lenders/creditors, statutory and other regulatory approvals that may apply.
Adapted from press release by Louise Fordham