Mumbai, Oct. 1: Grasim said its board of directors would meet on Saturday to consider a proposal to restructure its businesses, sparking speculation that it could spin off its cement operations.
Grasim did not provide any additional information in its terse communication to the stock exchanges.
Company officials were not available for comment.
There has been talk of a consolidation of the cement operations within the group under UltraTech Cement and today’s announcement lends some credence to this buzz.
Grasim now has diversified business lines, including cement, viscose staple fibre, chemicals and textiles. Cement is now the largest contributor to its topline. During 2008-09, cement production stood at nearly 17 million tonnes.
Grasim had acquired UltraTech Cement from Larsen & Toubro (L&T) in 2003 but the latter had retained a little over 11 per cent in the company. In June, L&T sold the stake and that triggered talk of a merger of the cement businesses of the Aditya Birla Group.
If a merger takes place, the combined entity will become the country’s largest cement company with a capacity of nearly 42 million tonnes.
Back in June, senior officials of Grasim had ruled out a merger as it would not lead to substantial benefits since both companies were operating under one brand and had a common marketing team. They also said a merger would entail a hefty stamp duty.
There is also speculation that the restructuring could involve the divestment of Grasim’s textile businesses to Aditya Birla Nuvo Ltd, another group company.
In textiles, Grasim is present in the fabrics and synthetic yarns segment through its subsidiary, Grasim Bhiwani Textiles Ltd, with branded suitings of Grasim and Graviera, largely in the polyester–cellulosic branded menswear.
Aditya Birla Nuvo is present in the apparel business through Madura Garments and in the domestic linen and worsted yarn segment through Jayshree Textiles.
The Aditya Birla Group restructured its businesses in 2005 when it merged Birla Global Finance and Indo Gulf Fertilisers with Indian Rayon. The consolidated entity was rechristened as Aditya Birla Nuvo.
