By merging Gulf and Birla Global Finance into Indian Rayon, the AV Birla group aims to create a highly diversified giant.Through consolidation of metals three years ago, we created value for shareholders together with market out-performance. We aim to achieve the same through this transaction. In a significant move, the Rs. 30,000 cr Aditya Birla Group recently brought together three of its group companies-Indian Rayon, Indo-Gulf Fertilizers, and Birla Global Finance-under one umbrella, Aditya Birla Nuvo. Nuvo indicates new age and opportunities. The restructuring, costing Rs. 5,000 cr would result in the creation of a giant with interests spanning across areas, viz., textiles, carbon black, fertilizer, IT and ITeS, and financial services. Further, to bring in enhanced focus, various businesses have been organized into two separate divisions with one concentrating on businesses like mutual funds, insurance, IT and ITeS, and garments, while the other division will look after interests in fertilizers, carbon black, and viscose filament yarn. The new entity came into effect from September 1, 2005.
The restructuring route, though, is not new to Indian Rayon. Over the last couple of years, the company has been relying on mergers and acquisitions to transform itself into a powerhouse, shedding along the way unrelated and unviable businesses. The company de-merged its cement and insulators businesses while it closed down its sea-water magnesia business. For instance, it went on an acquisition drive since 2000, lapping up Madura Garments in 2000, PSI Data System in 2001, and Transworks in 2003. Besides, it entered into a life insurance joint venture with Sun Life of Canada in 2001. It also went for the acquisition of a substantial stake in Idea Cellular earlier this year. It is expected that this mega restructuring would create an investment powerhouse as Birla Global Finance would be sitting pretty with access to strong cash flows from Indian Rayon and Gulf fertilizers. |
