Aditya Birla Capital, Aditya Birla Finance announce a Scheme of Amalgamation for large NBFC

Current Context: Aditya Birla Capital Limited (ABCL) and Aditya Birla Finance (ABFL) have announced a Scheme of Amalgamation to create a large unified operating Non-Banking Financial Company (NBFC) on 11th March 2024.

• The merger is expected to result in a reduction of legal entities and simplification of the group structure of Aditya Birla Capital.
• Post amalgamation, Aditya Birla Capital will transition from a holding company to an operating NBFC.
• This will create a unified large entity with greater financial strength and flexibility, enabling direct access to capital.
• The proposed amalgamation is expected to enhance value for various stakeholders of the company.
• The proposed amalgamation will also result in compliance with the Scale based Regulations of the Reserve Bank of India (RBI), which require mandatory listing of Aditya Birla Finance by September 30, 2025.
• After the merger, Vishakha Mulye, currently the CEO of ABCL, will take the role of MD & CEO, and Rakesh Singh will serve as Executive Director and CEO (NBFC) of the amalgamated company.
• This is subject to regulatory/statutory approvals as may be required.
• The merger is expected to consolidate the businesses and operational synergies, resulting in expansion and long-term sustainable growth.
• Kumar Mangalam Birla, Chairman of the Aditya Birla Group, has stated that the merger will enable the creation of a strong capital base for Aditya Birla Capital.

Question:

Q.1 What is the main purpose of the proposed amalgamation of Aditya Birla Capital Limited (ABCL) and Aditya Birla Finance (ABFL)?
a. To non-comply with the Scale based Regulations of the Reserve Bank of India (RBI)
b. To increase the number of legal entities
c. To transition from an operating company to a holding company
d. To create a large unified operating Non-Banking Financial Company (NBFC)