Hindalco and Indal integrate marketing operations
Seen as a precursor to merger
The marketing divisions of the Aditya Birla group`s two aluminium companies, Hindalco and Indal, have been integrated with effect from 1st January 2002. These initiatives are being seen as distinct pre-merger moves. If the two group companies are merged, it could create an Rs 38bn-plus monolith with reserves of over Rs 68bn - almost twice that of the nearest competitor, Nalco. The primary motivation for exploring the merger is that the direct returns to Hindalco from Indal investment are paltry and only a merger will significantly multiply benefits. One critical issue is that promoter holding in Hindalco is only around 21.2%. A merger at this stage with Indal would lower the promoters` stake further. Also with Indal`s key financial ratios lower than that of Hindalco, a merger would pull down Hindalco`s numbers. On the other hand, Indal has also embarked on a series of initiatives, post acquisition by the Birlas, to exit from almost all non-core activities to improve its financials. To save capex, Indal is also transferring smelting pots from its closed Belgaum smelter to Hirakud.
