The merger of Idea and Vodafone is on course and should be complete within 2018, Kumar Mangalam Birla, chairman, Aditya Birla Group, said in an interview to FE on Friday. He said that the group is on track with the timelines as stated at the time of the merger announcement. “We see it happening in calendar year 2018,” Birla said. He also said that the story on the payments bank for which the group had got a licence from the Reserve Bank of India (RBI) has got tweaked a little following the announcement of the Vodafone-Idea merger. “Since Vodafone also has its own payments bank, we obviously will merge the two now. The plan for that is being re-worked,” he said.
As for the structure, Birla said that the parentage for the payments bank as of now is Grasim and Idea from the Aditya Birla Group but after the merger it will be a separate entity headed by Idea and Grasim and Vodafone. As for the banking licence, he said that as the RBI had made it clear they don’t want to give licences to big business houses, the group does not have that option. “I don’t think regulation will allow it, so not seeing that as an option at all,” Birla said. In early August, Idea Cellular had said that it had filed an application before the Ahmedabad bench of the National Company Law Tribunal (NCLT) for approval of the merger of Vodafone India and Vodafone Mobile Services with itself.
The company has already received approvals from the Competition Commission of India on July 24 and from the stock exchanges and Securities and Exchange Board of India on August 4. The Ahmedabad bench of the NCLT had on August 21 asked Idea Cellular to conduct a meeting of shareholders and creditors on October 12 for seeking the approval of the merger. On March 20, Vodafone India and Idea Cellular had unveiled the contours of their $23-billion non-cash merger deal thereby creating a combined entity with total revenues at over `80,000 crore, 400 million customers, 35% subscriber market share and 41% revenue market share.
The merger will be effected through the issue of new shares in Idea to Vodafone. Post-merger, the total revenue at over Rs 80,000 crore of the merged entity will be less than the consolidated revenue of Bharti’s at Rs 95,468 crore (FY17), but it will be higher if only Bharti’s India operations revenue (Rs 74,516 crore) is taken into account. Meanwhile, on Friday, the company listed its financial services business — Aditya Birla Capital (ABCL) — as a separate entity after the demerger from Aditya Birla Nuvo. ABCL, which is the holding company of the financial services businesses, got listed at Rs 261.20 on the BSE. The stock fell 5% to hit its lower circuit and ended the session at Rs 248.15. A total of 50.59 lakh shares changed hands on both the BSE and NSE. The market capitalisation of the company stood at Rs 54,615.51 crore.
Formerly known as the Aditya Birla Financial Services, ABCL had a lending book of Rs 41,100 crore as on June 2017. For year 2016-17, aggregate revenue of ABCL stood at Rs 10,600 crore and profit before tax at Rs 1,150 crore. ABCL has a nationwide reach through over 1,300 points of presence and more than 150,000 agents/channel partners, and over 13.5 million customers. The company offers a range of financial services in insurance, asset management, private equity, corporate lending, project finance, equity and housing finance among others. Terming the financial services business one of the growth drivers for the group, Birla said that the company has a leadership position in most of the verticals that it operates in and there was still headroom for growth in those businesses.
“So, the idea is to scale them up and grow them more substantially which will be the focus for ABCL for the foreseeable future,” he said. Lending to small and medium enterprises and housing finance would be the two big areas for lending opportunities from its NBFC side. Apart from growing the existing businesses under financial services, the company is also looking at entering the asset reconstruction space and has applied for a licence to the RBI for the same, Birla said. He added that while it was too early to talk about partnerships in that business as it still awaits a nod from the RBI, the group will be open to partnerships. “We will be happy to look at a partner but we haven’t gotten that far to discuss it. But I think if there is a partner who has an experience in running an ARC and who can bring in capital, we would be happy to look at it,” Birla said.