Mumbai, Feb. 11: Aditya Birla Chemicals will be merged with Grasim Industries as part of the Aditya Birla group's strategy to bring similar businesses under one company.

The boards of both the companies approved the merger and decided on a share swap ratio of one share of Grasim for every 16 shares of Aditya Birla Chemicals (India) Ltd (ABCIL).

Grasim will issue 14.62 lakh new shares to the shareholders of ABCIL, which will increase its share capital to Rs 93.31 crore.

Grasim manufactures caustic soda, with an installed capacity of around 452,500 tonnes. Its plants are located at Nagda in Madhya Pradesh and Vilayat in Gujarat.

Caustic soda is used to manufacture viscose staple fibre (VSF) - a major business segment for Grasim. VSF is used in apparels, home textile, dress material and non-woven applications.

A key business of ABCIL is chlor-alkali, which includes caustic soda among other chemicals. It has three manufacturing plants at Rehla (Jharkhand), Renukoot (Uttar Pradesh) and Karwar (Karnataka) and an installed capacity of around 293,000 tonnes of caustic soda.

"The proposed merger will consolidate Aditya Birla Group's chlor-alkali business into Grasim and strengthen its portfolio of viscose staple fibre, caustic soda and allied chemicals in a standalone company," a statement by Grasim Industries said.

According to Grasim, the merger will result in geographical diversification through the addition of ABCIL's manufacturing facilities.

Today's merger comes within less than two months of UltraTech Cement, a subsidiary of Grasim, acquiring two units of Jaiprakash Associates in Madhya Pradesh for Rs 5,400 crore, increasing its capacity to 65 million tonnes.

Aditya Birla Chemicals today reported a 79 per cent decline in net profit at Rs 3.40 crore for the December quarter from Rs 16.35 crore a year ago because of lower income and high finance costs.