Grasim Industries has announced board approval for a comprehensive Composite Scheme of Arrangement involving multiple entities within the Aditya Birla Group's renewable energy ecosystem. The scheme aims to create a consolidated renewable energy platform under Aditya Birla Renewables Limited (ABReN) while streamlining operational structures and improving efficiencies through scale and synergies.

Board Approval and Strategic Objectives

The Board of Directors approved the composite scheme involving Essel Mining & Industries Limited (EMIL) and Aditya Birla Renewables Limited, along with certain group entities. The arrangement is designed to create a consolidated renewable energy platform with ancillary services, simplifying management and operational structures while enhancing efficiency through operational synergies.

Three-Part Transaction Structure

The scheme comprises three distinct components designed to consolidate renewable energy operations. The first involves transfer of EMIL's Renewable Energy Undertaking to ABReN on a slump sale basis without individual asset valuation, carried out as a going concern in accordance with applicable provisions of the Income Tax Act. The second component includes amalgamation of Electrotherm Renewables Private Limited (ERPL), a wholly owned EMIL subsidiary, with ABReN. The third part covers amalgamation of three EPC companies - ABREL EPCCO Services Limited, ABREL Renewables EPC Limited, and ABREL EPC Limited - all wholly owned ABReN subsidiaries.

Financial Metrics and Market Performance

The scheme involves entities with significant financial standing. EMIL reported standalone turnover of ₹330.93 crores with net worth of ₹20,138.54 crores, while ABReN recorded turnover of ₹132.84 crores with net worth of ₹1,199.74 crores.

The consideration involves issuance of 39,90,75,667 equity shares by ABReN at ₹10.15 per share for EMIL's renewable energy undertaking transfer, and 9,35,35,000 equity shares for ERPL amalgamation. Grasim Industries shares closed at ₹2,846.00 on BSE, registering a gain of 1.00%.

Regulatory Approvals and Implementation

The scheme requires multiple regulatory approvals including shareholders and creditors of involved entities, National Company Law Tribunal approvals, and other statutory clearances. Post-scheme implementation, ABReN's shareholding structure will change significantly, with promoter group shareholding increasing from 118,10,43,563 shares to 167,36,54,230 shares, maintaining 100.00% promoter ownership. Upon effectiveness, Grasim's shareholding in ABReN will be diluted as part of the consolidation process.

Grasim Industries Limited has disclosed receiving a stamp duty demand from the Madhya Pradesh Revenue Court, highlighting regulatory compliance challenges related to a decades-old business transfer agreement. The development was communicated to stock exchanges through a regulatory filing under the Securities and Exchange Board of India listing regulations.

Court Order Details

The Honorable Court of Revenue, Madhya Pradesh, Gwalior issued an order demanding stamp duty payment of ₹64.39 lakh (excluding interest). The demand relates to a Business Transfer Agreement dated May 7, 2002, concerning the valuation of factory structures.

Nature of Alleged Violations

The court order addresses several specific issues related to stamp duty compliance:

Financial and Operational Impact

Grasim Industries has stated that there is no material impact on financials, operations, or other activities due to this court order. This assessment suggests that while the demand exists, it does not pose significant operational challenges to the company's current business activities.

Regulatory Compliance Context

The disclosure was made pursuant to Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company followed the requirements under sub-para 20 of Para A of Part A of Schedule III of the Listing Regulations.

Business Transfer Agreement Background

The stamp duty demand relates to a Business Transfer Agreement executed on May 7, 2002, involving the transfer of factory structures and residential colony facilities. The court's order specifically questions the valuation methodology used for factory structures and the exclusion of tree values in stamp duty calculations, suggesting that the original assessment may have undervalued the transferred assets for stamp duty purposes under the Indian Stamp Act, 1899.