Mumbai, July 21 :    Mumbai, July 21:  The A. V. Birla group today announced the merger of Indo Gulf Corporation's copper business with Hindalco as part of a Rs 7,000-crore recast plan. Indo Gulf's fertiliser unit will be spun off into a separate firm called Indo Gulf Fertilisers. Twelve Indo Gulf shares will be exchanged for one of Hindalco. Investors will also get one share of Indo Gulf Fertilisers for every five shares of Indo Gulf Corp. The swap, approved by boards of both firms today, is based on the joint valuation report of C. C. Choksi and Ernst & Young. DSP Merrill Lynch was the transaction advisor. The recast, which will transform Hindalco into a non-ferrous metal powerhouse, is similar to the consolidation of cement business under Grasim Industries a few years ago. It will give Hindalco more financial power, helping it pursue acquisitions, including the big-ticket divestment of Nalco expected later this year. 'The restructuring will immensely strengthen the balance sheet of Hindalco. The company will be in a position to not only bid for large global sized companies since it has a strong balance sheet, but it can also raise cheap funds for major acquisitions,' an analyst said. A. V. Birla group chairman Kumar Mangalam Birla, making no bones about the fact Hindalco should grow inorganically, said: 'This is an important step in our endeavour to create a business that is focussed and has the financial capability to become a global player. The non-ferrous metal sector is integral to our growth plan.' The transaction would improve the company's financial capability, open more global opportunities and heighten investor interest given that capital market rewards large players with better valuations. According to company watchers, the current balance-sheet size of Hindalco gives the firm a headroom to borrow over Rs 4,000 crore, a figure expected to rise sharply after the consolidation of Indo Gulf's copper business. The merger of Indo Gulf's copper business will boost Hindalco's topline almost two fold to Rs 4,513 crore, from Rs 2331 crore on March 31, 2002. Company officials say if Indal and Dahej Harbour & Infrastructure Ltd are consolidated, the balance-sheet will swell by 30 per cent to more than Rs 10,000 crore. While net sales will be Rs 6,000 crore, profits are seen at Rs 1,000 crore. Hindalco, one of the largest producers of primary aluminium in the country with a capacity of 2.75 lakh tonnes, is completely integrated - it even manufactures downstream aluminium products. It is increasing the smelter capacity of its Renukoot unit to 3.42 lakh tonnes. On the other hand, Indo Gulf's copper business can produce over 1.50 lakh tonnes of the metal. The plant also makes copper cathodes and continuous cast copper rods. Group officials said Indo Gulf Corp shareholders would benefit from the opportunities to participate in Hindalco's future growth.