Expect Grasim- Nova merger process to be completed in 2-3 months: Sushil Agarwal, Group CFO, Aditya Birla Group
In an exclusive chat with ET Now, Sushil Agarwal, Group CFO, Aditya Birla Group speaks about the big merger.
ET Now: Congratulations on those crucial shareholders nods coming in. When the deal was first announced, there was a lot of trepidation and concern in the market regarding the rationale behind the deal and regarding the debt transfer. How are you able to convince the retail shareholders as well as the institutional shareholders because we are given to understand that both these pockets gave a nod to the deal with an overwhelming majority?
Sushil Agarwal: I want to thank all our shareholders both retail and institutional shareholders, who really kind of participated and given overwhelming response to the voting for the merger of Aditya Birla Nuvo to Grasim. I can assure all of those shareholders that we are here to create a long-term sustainable returns to our shareholders. So, thanks to our shareholders.
The point which you are making about initial response of some of the shareholders, it was media who had possibly did not really understood the full rationale of the transaction. We did not do a good job of while explaining the rationale of the transaction. It was in some form did misunderstood for variety of reasons and we went out, met majority of the shareholders institutional side and even conveyed to all our retail shareholders, the reasons and rationale of the transaction and I think outcome is in front of all of us.
They came forward and supported and they believed in what is being done. Generally speaking, if you see that what a shareholder would look normally, he would look for a leadership businesses, he would look for growth potential in those businesses. They would look for efficient plays in the sector. They would look for strong balance sheet. They would look for good governance.
With all these and at the end, they would look for a decent return from shareholder’s point of view. We with this transaction provide all of these. So that is where shareholders possibly got convinced that there is a leadership businesses. There is governance. There is attractive growth potential in the sectors in which the company will operate in.
ET Now: Just to take the conversation forward you spoke about the importance of having leadership position in various segments and if one way to look at the resultant entity it is quite a behemoth. Clearly, it is going to have a leadership position across various sectors cement, telecom, financial services, textiles, chemical sectors.
So, what are some of the plans in some of these sectors going ahead for the Aditya Birla Group as a conglomerate because this marks a landmark transition from the group there are many synergies that are going to come in from this merger but these are some of the sectors wherein the resultant entity is going to be quite a significant player in the market is not that right?
Sushil Agarwal: Yes, true the shareholders will have advantage to participate and steady cash flow operations of the current Grasim businesses while enabling them to have a growth in a sense to grow even faster. So, like financial services per se is a growing business and with the Grasim fold they can only take the benefits of faster growth.
In full sense, this company will have a India play given the sectors in which they have exposure. Recent corporate actions, which we have announced, including shares split, increase in FII limit, dividend payout policy will have a larger participation from the shareholders. This company will roughly will have a combined revenue of around 3000 crore and EBITDA of around 12000 crore.
Larger cement play as you talked about in the country among top five fund manager with the funds managed around 230000 crore with the leading book of around 30000 crore in our NBFC business, among top four life insurance player in the private sector and leading global player in VSF chemical player. The shareholders would be beneficiary of the scale in which we operate.
From a synergy point of view, just to give you the flavour the biggest beneficiary, will be a non-bank financed company, where we clearly with a strong balance sheet of Grasim they can have a benefit. In NBFC company, raw material is only finance rating and strength of the balance sheet or promoter does play a meaningful role, we believe that we have to maintain a similar kind of margin in NBFC company without taking a due risk the cost of borrowing plays a meaningful role. In this case, Grasim will provide that role and that would be beneficiary…the NBFC company will be beneficiary. We will be able to bring down our cost that will help to grow even faster and will increase the lender base with a strong credit profile of the company.
ET Now: Now since you spoke about the NBFC, one big movement that the street is waiting for of course is the listing, the inevitable listing of Aditya Birla Financial Services. Now that of course is part of the demerger from the company and the consequent listing plans. How is the listing plans working out and what is the kind of timeline that we can expect for Aditya Birla Financial Services to hit D-Street?
Sushil Agarwal: The shareholders, which was one of the critical parts of the merger approval, which has already taken place so Grasim shareholders approved the transaction on 6th of April and Nuvo shareholders approved on 10th.
Going forward, the shareholders approval or shareholders voting will be filed NCLT which is National Tribunal Council and the council will hear this matter and finally approve the transaction. We expect that around two to three months will be taken for this process to get completed by which Grasim- Nova merger will take place and maybe another 60 days odd for Aditya Birla Financial Services to get listed. So, this is the process and timeline, which we hope and by second quarter of the current year we should be able to complete the things.
ET Now: What about the progress of the ongoing discussions and the merger between Idea and Vodafone. Now clearly, that is also a big-big development that is keeping the Birla Group busy. What are the developments on that front, when do you expect that big bang merger to fructify and get all the necessary regulatory approvals?
Sushil Agarwal: It is on track and we will do another round of discussion for Idea separately. I want to thank all our retail shareholders and institutional shareholders to have participated in a overwhelming way and this was a good response from all the shareholders. We will have another round of discussion.
ET Now: Congratulations on those crucial shareholders nods coming in. When the deal was first announced, there was a lot of trepidation and concern in the market regarding the rationale behind the deal and regarding the debt transfer. How are you able to convince the retail shareholders as well as the institutional shareholders because we are given to understand that both these pockets gave a nod to the deal with an overwhelming majority?
Sushil Agarwal: I want to thank all our shareholders both retail and institutional shareholders, who really kind of participated and given overwhelming response to the voting for the merger of Aditya Birla Nuvo to Grasim. I can assure all of those shareholders that we are here to create a long-term sustainable returns to our shareholders. So, thanks to our shareholders.
The point which you are making about initial response of some of the shareholders, it was media who had possibly did not really understood the full rationale of the transaction. We did not do a good job of while explaining the rationale of the transaction. It was in some form did misunderstood for variety of reasons and we went out, met majority of the shareholders institutional side and even conveyed to all our retail shareholders, the reasons and rationale of the transaction and I think outcome is in front of all of us.
They came forward and supported and they believed in what is being done. Generally speaking, if you see that what a shareholder would look normally, he would look for a leadership businesses, he would look for growth potential in those businesses. They would look for efficient plays in the sector. They would look for strong balance sheet. They would look for good governance.
With all these and at the end, they would look for a decent return from shareholder’s point of view. We with this transaction provide all of these. So that is where shareholders possibly got convinced that there is a leadership businesses. There is governance. There is attractive growth potential in the sectors in which the company will operate in.
ET Now: Just to take the conversation forward you spoke about the importance of having leadership position in various segments and if one way to look at the resultant entity it is quite a behemoth. Clearly, it is going to have a leadership position across various sectors cement, telecom, financial services, textiles, chemical sectors.
So, what are some of the plans in some of these sectors going ahead for the Aditya Birla Group as a conglomerate because this marks a landmark transition from the group there are many synergies that are going to come in from this merger but these are some of the sectors wherein the resultant entity is going to be quite a significant player in the market is not that right?
Sushil Agarwal: Yes, true the shareholders will have advantage to participate and steady cash flow operations of the current Grasim businesses while enabling them to have a growth in a sense to grow even faster. So, like financial services per se is a growing business and with the Grasim fold they can only take the benefits of faster growth.
In full sense, this company will have a India play given the sectors in which they have exposure. Recent corporate actions, which we have announced, including shares split, increase in FII limit, dividend payout policy will have a larger participation from the shareholders. This company will roughly will have a combined revenue of around 3000 crore and EBITDA of around 12000 crore.
Larger cement play as you talked about in the country among top five fund manager with the funds managed around 230000 crore with the leading book of around 30000 crore in our NBFC business, among top four life insurance player in the private sector and leading global player in VSF chemical player. The shareholders would be beneficiary of the scale in which we operate.
From a synergy point of view, just to give you the flavour the biggest beneficiary, will be a non-bank financed company, where we clearly with a strong balance sheet of Grasim they can have a benefit. In NBFC company, raw material is only finance rating and strength of the balance sheet or promoter does play a meaningful role, we believe that we have to maintain a similar kind of margin in NBFC company without taking a due risk the cost of borrowing plays a meaningful role. In this case, Grasim will provide that role and that would be beneficiary…the NBFC company will be beneficiary. We will be able to bring down our cost that will help to grow even faster and will increase the lender base with a strong credit profile of the company.
ET Now: Now since you spoke about the NBFC, one big movement that the street is waiting for of course is the listing, the inevitable listing of Aditya Birla Financial Services. Now that of course is part of the demerger from the company and the consequent listing plans. How is the listing plans working out and what is the kind of timeline that we can expect for Aditya Birla Financial Services to hit D-Street?
Sushil Agarwal: The shareholders, which was one of the critical parts of the merger approval, which has already taken place so Grasim shareholders approved the transaction on 6th of April and Nuvo shareholders approved on 10th.
Going forward, the shareholders approval or shareholders voting will be filed NCLT which is National Tribunal Council and the council will hear this matter and finally approve the transaction. We expect that around two to three months will be taken for this process to get completed by which Grasim- Nova merger will take place and maybe another 60 days odd for Aditya Birla Financial Services to get listed. So, this is the process and timeline, which we hope and by second quarter of the current year we should be able to complete the things.
ET Now: What about the progress of the ongoing discussions and the merger between Idea and Vodafone. Now clearly, that is also a big-big development that is keeping the Birla Group busy. What are the developments on that front, when do you expect that big bang merger to fructify and get all the necessary regulatory approvals?
Sushil Agarwal: It is on track and we will do another round of discussion for Idea separately. I want to thank all our retail shareholders and institutional shareholders to have participated in a overwhelming way and this was a good response from all the shareholders. We will have another round of discussion.
