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Badal Sanyal

KOLKATA, July 26

THE Aditya Birla group's ongoing restructuring plan for its businesses and companies, which is slated to be completed within six months, will leave the senior management team unchanged at Hindalco Industries Ltd (Hindalco), Indian Aluminium Company Ltd (Indal) and Birla Copper.

This has been assured by the group Chairman, Mr Kumar Mangalam Birla.

In a circular issued to all employees of Indal, Mr Birla has stated that, as part of the group's restructuring exercise, Indal would be made a "wholly-owned subsidiary of Hindalco'' ( subject to approval of shareholders and other statutory authorities).

This move will be effected by Hindalco through an open offer to acquire the necessary additional equity in Indal. (Hindalco already controls 74.62 per cent equity stake in Indal.)

He said that the open offer was not only signalling the renewed commitment of the Aditya Birla group to Indal, but would also enable it to have only one listed large metal company .

Further, in the expanded Hindalco, the aluminium business of Indal and Hindalco would be coordinated to maximise the synergy benefits, while the company's copper division would continue to operate independently.

Indal employees were told that the Aditya Birla group had already gone through mergers, acquisitions, de-mergers and disinvestments during the last three to four years.

The acquisition of Indal and Madura Garments, the closing of the sea water magnesia and Mavoor plants, the de-merger of cement from Indian Rayon to enable consolidation of cement business in Grasim Industries Ltd had all been part of the value enhancement strategy of the group.As an ongoing part of the restructuring exercise, the group's management has proposed to split Indo Gulf Corporation into two parts and merge the copper division of Indo-Gulf with Hindalco, leaving the fertiliser division to operate as an independent company of the group.

Indal Union's All India Co-ordination Committee, however, fears that in the aftermath of Indal becoming a wholly-owned subsidiary of Hindalco, a large of number non-executive employees of the company may be retrenched or transferred, as no mention has been made in Mr Birla's circular about the continuity of service of non-executive employees of the company.

According to coordination committee sources, office-bearers of the committee are confused over the group's move towards making Indal a wholly-owned subsidiary of Hindalco.

They said the group, which already owns over 74 per cent equity shares in the company through Hindalco, should have a plan to decentralise the company's equity holding base by making a rights issue. But, in effect, they feel that the group is making Indal a "de-facto shell company.''

The co-ordination committee is reported to have decided to launch agitations in all the plants of the company in pursuit of the demand that their employment should be left undisturbed as will the case with the senior management.

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