Following approval by the National Company Law Tribunal (NCLT), Aditya Birla Group intends to consolidate its non-banking finance companies (NBFCs) to create better synergies, optimise resource utilisation, and increase economies of scale, according to people familiar with the matter.
The Mumbai bench of the NCLT recently approved the merger of half a dozen Birla Group companies, including Umang Commercial Company Pvt Ltd, Aditya Birla Online Fashion Pvt Ltd, and Birla Family Investments Pvt Ltd, into Birla Group Holdings Pvt Ltd (BGHPL), the Aditya Birla Group's key holding company.
The group also expects to achieve efficient capital utilisation for improved development and growth of the consolidated business under a single entity, including its non-banking financial business, which will continue to constitute its core business.
The other companies include Birla TMT Holdings Pvt Ltd, Infocyber India Pvt Ltd and Sunbeam Trading & Investments Pvt Ltd.
"The merger scheme will enable appropriate consolidation of the undertakings of the transferor companies and transferee company," Birla Group Holdings told the NCLT through its counsel. It will "result in the formation of a larger company having greater capacity to raise and access funds for its business and conducting trade on more favourable terms", it said.
The group stated in its application that it wanted to simplify its organisational structure and reduce the number of companies within the group.
Shafaq Uraizee Sapre, Mumbai managing partner of law firm Chandhiok and Mahajan, stated that the merger of these companies with Birla Group Holdings appears to be an attempt by the Birla family to consolidate the NBFC business.
Birla Group Holdings is an NBFC, and three of the six entities merging into this company are also NBFCs registered with the Reserve Bank of India.
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