MUMBAI: The Aditya Birla group companies, Indo Gulf Fertilisers Ltd and Birla Global Finance Ltd merged with Indian Rayon and Industries Ltd, another group company. The new restructured entity would be known as ``Aditya Birla Nuvo.'' This restructuring, valued at over Rs. 5,000 crores, is one of the major consolidations of its kind in India.

Under two separate restructuring schemes, Indian Rayon will issue to Indo Gulf shareholders 1 equity share of Indian Rayon for every 3 shares of Indo Gulf held. Indian Rayon will also issue to Birla Global Finance shareholders 1 equity share for every three equity shares of Birla Global Finance held. The swap ratio is expected to translate into a reasonable premium to both Indo Gulf and Birla Global Finance shareholders, based on the current Indian Rayon share price.

``This restructuring is an important step in shareholder value creation for all the three companies,'' said Kumar Mangalam Birla, Chairman, Aditya Birla Group, while addressing a press conference here on Sunday. He said it creates a company that captured opportunities in the economy.

Placing this in the context of similar value unlocking initiatives by the group in the past, Mr. Birla said, ``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.''

On this restructuring Mr. Birla said, ``even though the fertilizer business has seen steady profits, regulatory uncertainties constrain growth avenues, making accelerated value creation difficult. Becoming a part of the Indian Rayon shareholder fraternity should provide Indo Gulf shareholders broader canvas to participate in enhanced value creation. For the Birla Global shareholders, they extend their participation in financial services beyond mutual funds into life insurance, as the financial services business of the group gets consolidated under Indian Rayon.''

Indian Rayon would benefit from cash flows of fertilizer business that would spur growth across its business. According to him the group was making efforts to use profitable cash generated from companies such as Indo-Gulf to promote high-growth businesses like IT and IT-enabled services, garments, financial services and telecom.

Mr. Birla said that in the area of financial services, the company was looking for entry into the pension fund sector as and when it was opened up for private sector apart from focus on life insurance and mutual funds. Birla Global Finance has assets under management of more than Rs. 16,000 crores.

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