Grasim, Aditya Birla Merger: Shares Slopes Down By 8% to 24%

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Aditya Birla Merger

The country’s one of the biggest firms Grasim and Aditya Birla Nuvo’ merger let shares of the company slope down by 8% to 24% thus closing at Rs. 4,170 and Rs. 1,183.40, respectively, today at 9:30 a.m. IST. The following came during the BSE filing after a meeting held between the board of Directors and Aditya Birla Financial Servicesfor an appropriate scheme of management.

The Board of Directors included Aditya Birla Nuvo Ltd., Grasim Industries, and Aditya Birla Financial Services which attended a meeting on August 11, 2016, with a continuation and approval of the merger. Subsequently, it adhered to show the demerger along with a listing of its financial services business through a composite arrangement of the scheme.

READ: Tata Chemicals Seels Off Urea Plant To Yara India

After the merger of ABNL and Grasim, each share will be appreciated by 3 equity out of every 10 equity shares held in ABNL. Continuing with the demerger of financial services business in ABFSL, each stakeholding of Grasim will increase by 7 equity upon 1 equity held by Grasim. The net profit surged by 64% consolidating at Rs. 830 crores with a growth rate of 9% possessing a net revenue closing at Rs. 9089 crores in the current fiscal year.

Earnings before interest, taxation, depreciation and amortization(EBITDA) rose by 36% at Rs. 2214 crore. As of future business outlook, Grasim’s Viscose Staple Fibre (VSF) has improved globally and with an addition in capacity in slow motion has resulted in higher operatingrates in the industry. It will continue to focus towards VSF market thus trying to expand it via a partnership with textile value chain and better customer connection.

According to Kumar Mangalam Birla, Chairman, Aditya Birla Group, “The proposed restructuring will create one of India’s largest, well-diversified companies with a healthy mix of businesses with steady cash flows and long-term growth opportunities. With diverse businesses spanning manufacturing and services, the combined company provides a play on India’s growth story, Birla said. The demerger and listing of the financial services business will unlock value for shareholders.”

Grasim Industries carries forward two main businesses which are VSF and Cement. In Cement, demand is expected to grow by 7% in the current fiscal year along with focusing oninfrastructure development sector, housing, smart cities, etc.

ABNL net profit declined by 13.1% closing at Rs. 305 crores in quarter 1 being the sole reason of depreciation as reduction of sharesin Idea Cellular.

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