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Grasim Industries, an Aditya Birla Group company, has decided to merge Aditya Birla Chemicals with itself.
Grasim will issue one share of itself for every 16 held by Aditya Birla Chemicals’ investors. The swap ratio will lead to Grasim issuing 14.62 lakh new shares, which will increase its share capital to ₹93.31 crore.
Chlor–Alkali businessThe proposed merger will consolidate Aditya Birla Group’s Chlor–Alkali business into Grasim and strengthen its existing portfolio of viscose staple fibre (VSF), caustic soda and allied chemicals in the standalone company, which is stressed due to a sharp fall in VSF prices.
The merger will enable the geographical diversification for Grasim through the addition of Aditya Birla Chemical’s manufacturing facilities.
Grasim is the leading manufacturer of caustic soda in India, with an installed capacity of 452,500 tonnes a year. Its plants are located at Nagda (Madhya Pradesh) and a new unit was recently commissioned at Vilayat (Gujarat).
Caustic Soda is used as an input for manufacturing viscose staple fibre, which is a key business of Grasim.
Aditya Birla is one of the largest Chlor-Alkali companies with three plants at Rehla (Jharkhand), Renukoot (Uttar Pradesh) and Karwar (Karnataka) with an installed capacity of 293,000 tonnes of caustic soda a year and 110 MW of captive power plant.
The consolidation is in line with Aditya Birla Group’s philosophy to unify similar businesses into one company.
The Group recently spun off the cement business of Grasim to merge it with UltraTech Cement, another entity of the same group.
The proposed merger will be undertaken through a Court-approved Scheme of Amalgamation. Walker Chandiok & Co LLP has recommended the share exchange ratio.
The amalgamation will be subject to the approvals of the High Court, the Competition Commission of India, among others.
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