Grasim to set Greenfield VSF plant at Vilayat, Gujarat
The Boards of Directors of Grasim Industries Limited (“Grasim”) and Samruddhi Cement Limited, a wholly owned subsidiary of Grasim (“Samruddhi”), in their respective meetings held today, approved a proposal to demerge the cement business of Grasim into Samruddhi.
Samruddhi will issue 1 (one) new equity share to Grasim shareholders for every equity share they hold in Grasim, in addition to their existing Grasim shares. On completion of the demerger, Grasim shareholders will directly hold 35 per cent of Samruddhi, and Grasim's stake will be diluted to 65 per cent. Samruddhi is proposed to be listed after the Scheme is made effective.
As a separate matter, Samruddhi has resolved to pursue onward consolidation of the cement business and to that intent, it has decided to make a formal consolidation proposal to the Board of Directors of UltraTech Cement Limited.
Mr. Kumar Mangalam Birla, Aditya Birla Group Chairman said “This is part of Grasim's continuing efforts to improve shareholder value, in keeping with its record of outperforming both Sensex and its Peers over the past 10 years. The restructuring move announced today is designed to ensure Grasim's majority stake in, and continued support to, the rapidly growing Cement Business; while simultaneously, providing Grasim shareholders direct participation in the pure play cement company.”
Mr. Adesh Gupta, Whole Time Director and Chief Financial Officer, Grasim, added “Whilst Grasim's commitment to fund necessary capital for the growth of cement business remains unabated, the demerger opens up new choices for financing growth in the cement business in addition to continued parentage of Grasim, as also strengthening its other businesses.”
The Restructuring Scheme
According to the restructuring proposal approved by both the Boards, the demerger is proposed to be undertaken through a Court approved Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956. The appointed date for the transaction is 1st October 2009.
Under the Scheme, Grasim will transfer its cement businesses, including related businesses / investments but excluding its investment in UltraTech, to Samruddhi. In consideration, Samruddhi will issue one equity share of Rs. 5/- face value each credited as fully paid-up to the shareholders of Grasim for every equity share they hold in Grasim as of the Record Date.
Upon effectiveness of the Scheme, Samruddhi will be held approximately 65 per cent by Grasim and the balance 35 per cent will be held directly by the Shareholders of Grasim. Samruddhi is proposed to be listed.
Commenting on the rationale for the proposed restructuring, Mr. Birla added “The Board considered various other options before concluding and approving the structure. It reaffirmed its continuing interest in the cement business and hence wanted to consider only those restructuring proposals which ensured continued control and strategicinterest.”