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Indian Rayon: Now, Aditya Birla Nuvo! - Views on News from Equitymaster
 
 
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  • Sep 12, 2005

    Indian Rayon: Now, Aditya Birla Nuvo!

    The Aditya Birla Group, a Rs 330-bn conglomerate, involved in businesses ranging from metals, fertilisers, textiles, IT-ITES, finance and life insurance, is merging two of its group companies, Birla Global Finance (BGF) and Indo Gulf Fertilisers (IGF) with Indian Rayon. The consolidated entity will be rechristened Aditya Birla Nuvo and will have Rs 60 bn in consolidated revenues.

    The swap ratio for the deal is at 1:3 under two separate restructuring schemes. This implies that shareholders in BGF and IGF will receive one share of Indian Rayon for every three shares they hold in either of the two companies.

    Shareholding patterns of individual companies and the consolidated entity
    Indian
    Rayon
    Indo
    Gulf Fertilisers
    Birla
    Global Finance
    Aditya
    Birla Nuvo
    Promoters 25.2% 58.2% 74.4% 38.0%
    Indian Public* 22.0% 14.9% 16.0% 0.0%
    FIIs 12.3% 2.4% 0.0% 15.0%
    Banks/FIs, Govt/Non-govt instns 16.1% 9.1% 0.0% 22.0%
    Others 24.4% 15.4% 9.7% 25.0%
    * For Aditya Birla Nuvo, the shareholding of the Indian public is included in 'Others'

    What is the rationale?
    As per the management, this merger will enable the consolidated entity to have greater borrowing power. This assumes significance in light of the fact that the entity will be a highly diversified company, involved in businesses ranging from viscose staple fibre (VSF), textiles, carbon black, insulators, IT-ITES, telecom and life insurance. The cash flows from 'value businesses' like VSF and textiles will be used to fund the 'high-growth businesses' like IT-ITES and life insurance. The group also plans to explore opportunities in financial services, asset management and banking in future, provided regulations permit. Clearly, the Aditya Birla Group has ambitious expansion plans and this step signifies this.

    We shall soon update our readers with a detailed review of this restructuring exercise of the Aditya Birla Group.

     

     

    Equitymaster requests your view! Post a comment on "Indian Rayon: Now, Aditya Birla Nuvo!". Click here!

    1 Responses to "Indian Rayon: Now, Aditya Birla Nuvo!"

    amit mittal

    Aug 3, 2017

    hi kindly confirm that i have 123 shares of indian rayon industries. so how many shares of AB Novo i will get insted of these shares.and how

    Regards
    Amit mittal
    9999344990

    Like 
      
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