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T N Ninan: Not a good 'idea', sirji

Investors suspect that the proposed Grasim-Nuvo merger is to ensure the Idea telecom business gets the money to take on RJio

T N Ninan  |  New Delhi 

T N Ninan

The Aditya Birla group’s decision to merge two companies, each with an existing clutch of diverse businesses, flies in the face of the accumulated wisdom regarding conglomerates. Investors have already hammered down the stock of both Grasim and Aditya Birla Nuvo—one more than the other because of a perceived unfairness in the merger ratio.

The real issue though is about the future, and how well a conglomerate can be expected to perform on the market when it has such unrelated businesses as viscose fibre, cement, aluminium and telecom services. The bundling of cash cow businesses ...

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First Published: Fri, August 12 2016. 21:50 IST