The Hindu Business Line : Hindalco finalises merger of Indal units with itself

HINDALCO Industries Ltd, an Aditya Birla Group company, today announced plans to merge all but one business of its subsidiary, Indian Aluminium Company Ltd (Indal), with itself.

The companies have decided on a share swap ratio of one share of Hindalco for every seven shares of Indal. However, Hindalco owns nearly 97 per cent of equity stake in Indal. Around 12,000 shareholders hold the remaining three per cent stake in Indal.

Indal will continue to exist as an entity and will continue with the businesses of Annapurna Foils Ltd, its subsidiary.

Indal shareholders will continue to hold its shares. However, the face value of these shares will be reduced from Rs 10 per share to Rs 2. This is mainly because Indal will be a much smaller entity as its equity capital will be down at Rs 14 crore from the earlier level of Rs 71 crore.

Within the Group, the merger of Indal's business with Hindalco has been code named Project Crescent. The earlier merger of Birla Copper with Hindalco was code named Project Trident. According to Mr Debu Bhattacharya, Managing Director, Hindalco Industries Ltd, the merger was on the cards. "We have been moving in a systematic and planned manner. After the merger, we wanted the process at Indal to get aligned with the ways of Aditya Birla Group. As that has been achieved, this was the best time to merger," he said.

He said there are synergies at the market place, at operational level as well as at the balance sheet level. "Indal has a substantially big growth plan envisaging an investment of Rs 2,000 crore. The merger will help in driving this growth plan," Mr Bhattacharya said.

The merger will push up Hindalco's turnover to Rs 8,000 crore and profit after tax to Rs 1000 crore. Hindalco ended the year 2003/2004 with net sales of Rs 6,190 crore and profit after tax of Rs 839 crore.

Enumerating the operational benefits of the merger of Indal with Hindalco, Mr Bhattacharya said there will be enhanced flexibility because of the integration of balance sheet. There will be savings on sales tax for inter company transaction and optimal use of depreciation benefits from large investments being contemplated by Indal.

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