MERGER OF

GRASIM AND
ADITYA BIRLA NUVO
Name Roll Nos.

GROUP 1 – BATCH 39 & 40 (FINANCE)

Anirban Bhattacharya KHR2014SMBA39P038

Poonam Pandey KHR2014SMBA39P037

Jyoti Upadhyay Shukla KHR2014SMBA39P064

Jyoti R Choudhary KHR2014SMBA40P024

1
 KEY TERMS
• MERGER: • KEY COMPANIES / BUSINESS -
An amicable involvement of two or GRASIM:
more companies to form one unit,
and to increase overall efficiency.
 Ultratech Cement
• DEMERGER:
 Textiles
A business strategy in which a single
 Chemicals
business is broken into components
• COMPANIES INVOLVED:
1. Grasim Industries • KEY COMPANIES / BUSINESS –
ADITYA BIRLA NUVO:
2. ABNL: Aditya Birla Nuvo
(Target Entity) Formerly Indian
Rayon and Industries  ABFSL
3. ABFSL: Aditya Birla Financial  Idea Cellular
Services Ltd. (Demerged
Entity)  Birla Sun Life Insurance
The board of directors of the 3
companies approved the scheme at
their respective board meetings
2
STEPS IN MERGER
• 2 step Merger / Demerger:

MERGER SPIN OFF LISTING

STEP 2:
STEP 1: STEP 3:
Demerger of (ABFSL – Resulting in a listed financial
Merger of ABNL with
Aditya Birla Financial services co. with 57% owned
Grasim Industries
Services Ltd.) by post-merger Grasim
Industries

3
GRASIM AND ABNL SHAREHOLDING

Grasim shareholding ABNL shareholding Other

Institutions,
6%

Aberdeen,
LIC, 6% 6%

Individuals,
11%
Promoters
holding,
31%

FPI, 23% FII, 12%

Promoters
holding, 58%
Retail
holders& Domestic MF,
non- 8%
promoters, Domestic
12.30% GDR MF, 9%
holders,
8%
Other Non-
ICICI Institutions,
Prudential, 4%
4%

4
5
Public holding in
ABFSL is 26%

6
What will shareholders get
Share – Swap ratio:
1. For merger:

i) ABNL Shareholders:

Each shareholder of Aditya Birla Nuvo (ABNL) will get three new equity shares of
Grasim Industries for every 10 equity shares held in ABNL

Shareholder holding 100 shares in ABNL will get 30 shares in Grasim

Hence, Swap ratio is 1:3.33

ii) Grasim shareholder’s:

Will continue to hold equity shares in Grasim (Post merger)

2. For Demerger:

i) ABNL Shareholders:

Will get 2.1 shares of ABFSL for every one share held in the company.

ii) Grasim shareholder’s:

Will get 7 equity shares in ABFSL for each equity share held in Grasim (Post merger)

7
Scenario Post merger

Business Pre-merger Post Merger Remarks - Overall

holding (%) holding (%) Holding
(Increase/Decrease)

Promoters Public TOTAL Promoters Public

Grasim 31.3 68.7 100 39 61 +7.1% increase in
holding by promoters
and similar reduction
for public shareholders
ABNL 58.4 41.6 100 ----- ----- ABNL will cease to
exist after the
merger

8
Scenario Post merger
Business Pre-merger Post Merger Remarks - Overall Holding
holding (%) holding (%) (Increase/Decrease)
ABNL GRASIM TOTAL GRASIM+
ABNL
ABFSL 100 0 100 57 Grasim increases 57%
exposure to Financial
services. ABNL reduces
exposure. [ -ve for ABNL
shareholders]
ABNL 0 2.6 2.6 100 ABNL will cease to exist after
the merger
Idea Cellular 23.3 4.7 28 28 +23.3% increase in stake for
Grasim
Hindalco 1.6 2.6 4.2 4.3 +1.7% increase in stake for
Grasim
Ultratech 0 60.2 60.2 60.2 Maintains
Aditya Birla 9.1 2.3 11.4 11.4 +9.1% increase in stake for
Fashion & Grasim
Retail
Birla Sun Life 51 0 51 57 Will be merged with ABFSL
9
Insurance
 Scenario Post Merger
Cement

Textiles Chemical
9%
Manufacturing
(68%) Chemicals
Textiles,
Cement, 17%
42%
Insulators

Financial
Solar Services,
15% Others,
Telecom, 1%
Financial Services 16%

Financing
Services Insurance
Telecom
(32%) Chemicals Textiles
Asset Management
Others Financial Services
Wealth Management
Telecom Cement
Payments Bank 10
Scenario Post Merger
Consolidated Financial Performance Post merger
ABFSL Percentage holding post
merger FY16 (Rs. Cr)
Particulars
Aditya Birla
Grasim Aggregate
Nuvo
Post meger
Grasim (i.e.
Grasim + ABNL) Revenue 36,637 23,129 59,766

17% Public & Grasim

shareholders on
proportionate
basis EBITDA 7,025 4,935 11,961
Promoters
26% 57% including K M
Birla

PAT 2,359 1,886 4,245

Debt 9,732 33,959 43,691

11
 IDEA CELLULAR – YEARLY RESULTS
Idea Cellular
Consolidated Yearly Results ------------------- in Rs. Cr. -------------------
Particulars Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
Net Sales/Income from operations 35,935.29 31,526.87 26,431.97 22,407.44 19,488.68
Other Operating Income 45.66 44.02 86.94 50.21 52.48
Total Income From Operations 35,980.95 31,570.89 26,518.91 22,457.65 19,541.16
EXPENDITURE
Purchase of Traded Goods 28.9 145.17 192.7 231.84 141.37
Employees Cost 1,659.90 1,529.87 1,312.12 1,122.53 949.92
Depreciation 6,650.78 5,303.62 4,519.40 3,477.77 2,981.34
Admin. And Selling Expenses 3,353.25 2,878.27 2,467.36 2,518.76 4,738.20
Other Expenses 17,908.94 16,205.91 14,213.05 12,579.98 8,619.33
P/L Before Other Inc., Int., Excpt. Items & Tax 6,379.18 5,508.05 3,814.28 2,526.77 2,111.00
Other Income 227.12 469.67 -- -- --
P/L Before Int., Excpt. Items & Tax 6,606.30 5,977.72 3,814.28 2,526.77 2,111.00
Interest 1,881.64 1,045.19 770.01 949.45 1,055.73
P/L Before Exceptional Items & Tax 4,724.66 4,932.53 3,044.27 1,577.32 1,055.27
P/L Before Tax 4,724.66 4,932.53 3,044.27 1,577.32 1,055.27
Tax 1,644.73 1,739.62 1,076.45 566.39 332.28
P/L After Tax from Ordinary Activities 3,079.93 3,192.91 1,967.82 1,010.93 722.99
Net Profit/(Loss) For the Period 3,079.93 3,192.91 1,967.82 1,010.93 722.99
Minority Interest -- -- -- -- --
Share Of P/L Of Associates -- -- -- -- --
Net P/L After M.I & Associates 3,079.93 3,192.91 1,967.82 1,010.93 722.99
Equity Share Capital 3,600.51 3,597.84 3,319.63 3,314.32 3,308.85
Reserves Excluding Revaluation Reserves 22,165.11 19,429.47 13,205.42 10,989.04 9,739.45
EPS Before Extra Ordinary
Basic EPS 8.56 9.03 5.93 3.05 2.19
Diluted EPS 8.53 8.99 5.92 3.05 2.18
EPS After Extra Ordinary
Basic EPS 8.56 9.03 5.93 3.05 2.19
Diluted EPS 8.53 8.99 5.92 3.05 2.18
Public Share Holding
No Of Shares (Crores) -- 207.72 179.9 179.36 17.88
Share Holding (%) -- 57.73 54.19 54.12 54.04
Promoters and Promoter Group Shareholding
a) Non-encumbered
- Number of shares (Crores) -- 152.07 152.07 152.07 152.07
- Per. of shares (as a % of the total sh. of prom. and
-- 100 100 100 100
promoter group)
- Per. of shares (as a % of the total Share Cap. of the 12
-- 42.27 45.81 45.88 45.96
company)
 ULTRATECH– YEARLY RESULTS
UltraTech Cement

------------------- in Rs. Cr. -------------------

Standalone Yearly Results
Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
Net Sales/Income from operations 23,841.03 22,656.48 20,077.88 20,017.94 18,166.38
Other Operating Income 266.33 279.69 201.92 157 146.75
Total Income From Operations 24,107.36 22,936.17 20,279.80 20,174.94 18,313.13
EXPENDITURE
Consumption of Raw Materials 3,553.71 3,280.62 2,910.95 2,792.12 2,377.70
Purchase of Traded Goods 439.68 389.52 309.37 235.71 177.34
Increase/Decrease in Stocks -12.31 -110.06 106.98 -118.19 21.26
Power & Fuel 4,240.81 4,742.89 4,135.42 4,298.94 4,303.97
Employees Cost 1,341.52 1,218.29 1,014.63 968.35 831.04
Depreciation 1,289.03 1,133.11 1,052.26 945.37 902.56
Other Expenses 9,927.83 9,219.88 7,984.55 7,322.53 6,454.40

P/L Before Other Inc. , Int., Excpt. Items & Tax 3,327.09 3,061.92 2,765.64 3,730.11 3,244.86
Other Income 235.16 371.78 329.04 305 371.87
P/L Before Int., Excpt. Items & Tax 3,562.25 3,433.70 3,094.68 4,035.11 3,616.73
Interest 505.29 547.45 319.17 209.71 223.86
P/L Before Exceptional Items & Tax 3,056.96 2,886.25 2,775.51 3,825.40 3,392.87
Exceptional Items -- -- -- -- --
P/L Before Tax 3,056.96 2,886.25 2,775.51 3,825.40 3,392.87
Tax 882.31 High 871.52 631.04 1,169.97 946.68
P/L After Tax from Ordinary Activities 2,174.65Reserves 2,014.73 2,144.47 2,655.43 2,446.19
Prior Year Adjustments -- of -- -- -- --
Extra Ordinary Items -- Ultratech -- -- -- --
Net Profit/(Loss) For the Period 2,174.65 2,014.73 2,144.47 2,655.43 2,446.19
Equity Share Capital 274.43 274.4 274.24 274.18 274.07
Reserves Excluding Revaluation Reserves 20,461.66 18,583.28 16,823.27 14,960.64 12,585.75
Equity Dividend Rate (%) -- 90 90 90 80
EPS Before Extra Ordinary
Basic EPS 79.25 73.44 78.21 96.87 89.26
Diluted EPS 79.2 73.39 78.18 96.85 89.22
EPS After Extra Ordinary
Basic EPS 79.25 73.44 78.21 96.87 89.26
Diluted EPS 79.2 73.39 78.18 96.85 89.22
Public Share Holding
No Of Shares (Crores) -- 10.03 10 9.88 9.49
Share Holding (%) -- 36.56 36.47 36.02 34.64
Promoters and Promoter Group Shareholding
a) Non-encumbered
- Number of shares (Crores) -- 16.93 16.93 17 17.36
- Per. of shares (as a % of the total sh. of prom. and promoter
-- 100 100 100 100
group)
-- 61.69 61.73 62.01 63.34 13
- Per. of shares (as a % of the total Share Cap. of the company)
 GRASIM YEARLY RESULTS Grasim Industries
Consolidated Yearly Results ------------------- in Rs. Cr. -------------------
Particulars Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
Net Sales/Income from operations 36,217.70 32,437.63 29,008.19 27,639.72 24,987.84
Other Operating Income 419.18 409.71 319.85 264.6 256.46
Total Income From Operations 36,636.88 32,847.34 29,328.04 27,904.32 25,244.30
EXPENDITURE
Consumption of Raw Materials 8,879.61 8,030.39 7,029.44 6,143.15 5,365.67
Purchase of Traded Goods 591.43 556.51 457.12 339.65 261.61
Increase/Decrease in Stocks 31.25 -159.61 45.35 -196.25 -85.82
Power & Fuel 6,217.06 6,452.71 5,653.14 5,603.83 5,460.49
Employees Cost 2,407.19 2,141.16 1,847.09 1,670.63 1,377.17
Depreciation 1,910.96 1,563.22 1,457.48 1,252.06 1,154.41
Other Expenses 11,821.21 10,681.72 9,381.47 8,419.72 7,290.29
P/L Before Other Inc., Int., Excpt. Items & Tax 4,778.17 3,581.24 3,456.95 4,671.53 4,420.48
Other Income 336.36 538.96 576.59 619.53 745.36
P/L Before Int., Excpt. Items & Tax 5,114.53 4,120.20 4,033.54 5,291.06 5,165.84
Interest 751.34 667.39 447.32 324.14 313.64
P/L Before Exceptional Items & Tax 4,363.19 3,452.81 3,586.22 4,966.92 4,852.20
Exceptional Items -27.85 -9.46 -- 204.43 --
P/L Before Tax 4,335.34 3,443.35 3,586.22 5,171.35 4,852.20
Tax 1,211.13 1,015.92 734.79 1,467.21 1,320.77
P/L After Tax from Ordinary Activities 3,124.21 2,427.43 2,851.43 3,704.14 3,531.43
Net Profit/(Loss) For the Period 3,124.21 2,427.43 2,851.43 3,704.14 3,531.43
Minority Interest -910.52 -837.86 -882.76 -1,073.40 -947.13
Share Of P/L Of Associates 145.46 154.23 102.87 73.65 63.16
Net P/L After M.I & Associates 2,359.15 1,743.80 2,071.54 2,704.39 2,647.46
Equity Share Capital 93.36 91.86 91.83 91.78 91.72
Reserves Excluding Revaluation Reserves 25,679.34 22,988.71 21,478.01 19,522.09 16,935.01
EPS Before Extra Ordinary
Basic EPS 252.75 189.84 225.61 294.75 288.65
Diluted EPS 252.52 189.84 225.5 294.51 288.4
EPS After Extra Ordinary
Basic EPS 252.75 189.84 225.61 294.75 288.65
Diluted EPS 252.52 189.84 225.5 294.51 288.4
Public Share Holding
No Of Shares (Crores) -- 5.51 5.51 5.54 5.77
Share Holding (%) -- 60.02 60.05 60.31 62.96
Promoters and Promoter Group Shareholding
a) Non-encumbered
- Number of shares (Crores) -- 2.34 2.34 2.34 2.34
- Per. of shares (as a % of the total sh. of prom. and
-- 100 100 100 100
promoter group)
25.5514
- Per. of shares (as a % of the total Share Cap. of the
-- 25.51 25.51 25.53
company)
Key observations
• Ultratech (Under Grasim) has a Cash Reserves of 20,461.66 Cr at the end
of March 2016. Grasim on a consolidated basis has a Cash Reserves of
22,988.66 Cr i.e. 89% of the reserves are from Ultratech.
• The new entity will be a holding company which will have various
businesses under it. Holding companies do not get the kind of valuation a
normal company does. Holding companies derive their revenues by way of
dividends only.
• After the merger the cash reserves of Ultratech would be accessible to Idea
cellular.
• From a Grasim’s shareholders point of view, he would continue to hold the
same number of shares of the company and will also receive seven shares
of Aditya Birla Financial Services. Thus a Grasim shareholder has nothing
to lose.
• Debt levels:

Company Debt in crores Remarks

GRASIM 12,841 Idea cellular
has high level
Ultratech 8,165
of Debt
Idea Cellular 38,754
15
Pro’s and Cons
GRASIM VIEW:
1. The new entity will have a mixture
of mature and new-age
businesses with steady cash
flows
2. Provides shareholders of Grasim
with exposure to fast growing
sectors, including telecom and
financial sectors
3. Enable ABFSL to raise capital at
lower costs since Grasim has
better credit rating
4. Better liquidity of combined
company
5. ABNL shareholders will get direct
exposure to strong cash flow
generating business
6. All financial business including
Birla sun life and Payments bank
would be listed by May-June next
year as there is a rapid credit
boom for NBFC’s
OUR VIEW / SHAREHOLDER’s VIEW:
1. Grasim cash (Ultratech being cash surplus
company, Reserves of Rs. 20,461.66 Cr) would
be used to fund Idea’s capex requirement. i.e.
attempt to bulk up the balance sheet of Idea
cellular ahead of spectrum auction and
Reliance Jio
2. The exposure of ABNL shareholder’s to high
growth finance business could get diluted. In
contrast Grasim shareholder’s have no option
to choose whether they want stake in financial
business or not.
3. Absolute debt level will go up but Debt : Equity
(net gearing) will not be a problem. Idea
cellular debt will reflect (Rs.37,658 crores) will
reflect in Grasim balance sheet
4. Grasim shares will suffer from holding
company discount (i.e. Grasim M cap is less
than the sum of investments it holds) and Idea
and ABFSL will add to the holding co discount
5. Lower stock valuation for Grasim shareholders
and exposure to unrelated business i.e.
Telecom and Financial services
6. Perceived to be a complex corporate
restructuring
16
THANK YOU

17