Grasim to demerge its cement business
The Aditya Birla Group will demerge the cement business of its flagship Grasim Industries into a company named Samruddhi.business Updated: Oct 04, 2009 02:10 IST
The Aditya Birla Group will demerge the cement business of its flagship Grasim Industries into a company named Samruddhi.
The new company, formed as a holding concern, will absorb the demerged business as a precursor to a merger with UltraTech, the company’s cement-making subsidiary. Grasim’s holding in UltraTech will not be transferred.
Adesh Gupta, chief financial officer of Grasim, is one of three members on the Samruddhi board. The new company will issue one equity share to Grasim shareholders for every Grasim share they hold.
On completion of the demerger, Grasim shareholders will directly own 35 per cent of Samruddhi, and Grasim’s stake will be diluted to 65 per cent, the company said in a statement on Saturday.
The potential merger would also open up new avenues for raising capital. “This is an intermediate step and eventually the total cement business will be consolidated in a single firm, once Samr-uddhi makes a proposal to Ultra Tech. We expect the total process to take eight to 10 months,” Gupta said.