Market reacts to news of a possible AB Group rejig

The one stock that came under tremendous pressure today wasGrasim, with the markets reacting to our newsbreak last evening about a major rejig being under way at the Mumbai-headquartered group. Aditya Birla Group is gearing up for a rejig and is realigning its business verticals such as Grasim, AB Nuvo and AB Money, according to the people in the know of the group. The aim is to focus on core assets, while diversifying and expanding into growth sectors. Over the next 2-3 weeks, executives of the group are likely to discuss and decide on the future course of action. People aware of the development say Aditya Birla Group is likely to demerge all of its non-financial businesses such as telecom and agriculture, cement into a separate entity. This holding entity will be merged in to Grasim at a later date, they say. The market capitalisation of this company before the demerger of apparel and fashion bsuiness was Rs 27,000 crore. Post demerger AB Nuvo's market cap will be Rs 20,000 crore. Aditya Birla Fashion and Retail's mcap will be Rs 12,000 crore. AB Nuvo's has surged nearly 100 percent from its lows.

AB Nuvo has to be divided into financial and non-financial part. In the financial part, they have 51 percent stake in Birla Sun Life Mutual Fund worth Rs 3200 crore; 74 percent in Birla Sun Life Insurance worth Rs 6000 crore Upcoming business include Housing Fin and Health Insurance. 

If the merger happens the swap ratio will be meaningful, reports CNBC-TV18's Varinder Bansal. Watch video for more...