Aditya Birla Capital to merge subsidiary Aditya Birla Finance

The boards of directors of Aditya Birla Capital Ltd and its wholly-owned subsidiary, Aditya Birla Finance, have approved a scheme of amalgamation of the two companies to create a larger non-banking finance company (NBFC).

Aditya Birla Capital Ltd is a listed and systemically important non-deposit taking core investment company (NBFC-CIC) while its subsidiary, Aditya Birla Finance, is a non-deposit taking systematically important NBFC (NBFC-ICC).

The amalgamation is subject to regulatory and other necessary approvals.

Since both entities are non-deposit taking investment companies, the merger of the two NBFCs will help rationalize and simplify the group structure. It will reduce the number of legal entities, making the group structure of Aditya Birla Capital leaner.

The amalgamation would change the status of Aditya Birla Capital from a holding company to an operating NBFC, creating a larger entity with a greater financial strength and flexibility enabling direct access to capital. 

The merger will lead to business consolidation and operational synergies, resulting in sustainable growth, thereby enhancing value for stakeholders.

A unified entity will be able to implement policy changes uniformly, without having to conform to multiple legal and regulatory norms, leading to seamless operation.

The merger with a listed entity will result in compliance with RBI regulations, which require mandatory listing of Aditya Birla Finance by 30 September 2025.

Kumar Mangalam Birla, chairman Aditya Birla Group, said the financial services business has  emerged as a core growth engine for the Aditya Birla Group and the amalgamation will create a strong capital base for Aditya Birla Capital to grow further.

Vishakha Mulye, CEO, Aditya Birla Capital, said the move will help improve service quality while ensuring profitable growth by harnessing the power of data and digital technology. 

On completion of the scheme, Vishakha Mulye will assume the role of MD and CEO while Rakesh Singh will become executive director and CEO (NBFC) of the amalgamated company, subject to regulatory and statutory approvals.

As of 31 December 2023, Aditya Birla Capital had aggregate assets under management of about Rs4.1 lakh crore with a total lending AUM of Rs1,15,139 crore and gross written premium of Rs13,500 crore in Life and Health Insurance businesses. 

It reported consolidated revenue of Rs26,791 crore and an after-tax profit of Rs2,090 crore for the first nine months of the current financial year.

The company, with nationwide operations, had 1,462 branches across all businesses as of 31 December 2023.