Grasim to merger group company Aditya Birla Chemicals

Aditya Birla Group flagship Grasim Industries today said its board of directors has approved the merger of Aditya Birla Chemicals with itself, in line with the group's vision to unify similar business in one company.

''The board of directors of Grasim Industries Limited today approved the proposed merger of Aditya Birla Chemicals (India) Limited, an Aditya Birla Group company, with Grasim,'' Grasim stated in a stock market filing.

The companies have fixed the swap ratio of one share of Rs10 each of Grasim for every 16 shares of Rs10 each of Aditya Birla Chemicals. Grasim will issue 1.46 million shares, which will increase its share capital to Rs93.31 crore, the release said.

With plants located at Nagda (Madhya Pradesh) and a unit which was recently commissioned at Vilayat (Gujarat), Grasim is the leading manufacturer of caustic soda in India, with an installed capacity of over 452,500 tonnes per annum.

Caustic soda is inter-alia used as an input in the manufacturing of viscose staple fibre, which is a major business of Grasim.

ABCIL is one of the leading chlor-alkali companies in India with three manufacturing plants located at Rehla (Jharkhand), Renukoot (UP) and Karwar (Karnataka) with an installed capacity of over 293,000 tonnes of caustic soda per annum and 110 MW of captive power plant.

The proposed merger will consolidate Aditya Birla Group's chlor-alakali business into Grasim and strengthen its existing portfolio of viscose staple fibre, caustic soda and allied chemicals in the standalone company.

The merger will enable the geographical diversification for Grasim through the addition of ABCIL's manufacturing facilities spread across the country. It will also enable the business to capitalise growth opportunities by bringing in operational and financial synergies, backed by Grasim's strength. The consolidation is in line with Aditya Birla Group's philosophy to unify similar business in one company.

Grasim said the proposed merger will be undertaken through a court-approved scheme of amalgamation and that the merger 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, if any.

Walker Chandiok & Co LLP has recommended the share exchange ratio wehile Axis Capital Ltd provided a fairness opinion to the board of Grasim on the share exchange ratio recommended by the independent valuer. Khaitan & Co is the legal advisor to the transaction.