The Aditya Birla Group (ABG) has employed a traditional and time-tested business strategy of milking the cash cows to invest in high growth businesses. Mergers, demergers and acquisitions have been favorite activities of the ABG for a long time now, and it is back again, but with a twist this time. Under Section 394 of the Companies Act, the group has planned for an internal restructuring and has merged Indian Rayon with Indo Gulf Fertilizers Limited (IGFL) and Birla Global Finance Limited (BGFL). The merger, which is valued at over Rs. 5,000 cr, is effective from September 1, 2005, and is a step towards utilizing the excess cash reserves available with value businesses such as fertilizers, carbon black, textiles, etc., to promote high growth businesses, namely Information Technology (IT), IT-enabled services (ITES), financial services, telecom, etc. In addition to this, the company also intends to tap the pension fund sector as and when it is opened for private players. The merged entity, which is named "Aditya Birla Nuvo", would be the third largest group company, after Hindalco and Grasim, and would focus on both high value and high growth businesses, and is expected to create value for stakeholders of all the three companies.

Indian Rayon, which was incorporated in 1956, has undergone a series of restructuring in the past seven years. To start with, it demerged the cement business and also closed its sea-water magnesia project in 1998. Later in 1999, under Section 77 of the Companies Amendment Act, the company bought back its equity shares. This was followed by the acquisition of Madura Garments in 2000. This was just the beginning. In the year 2001, Indian Rayon finalized two major deals by acquiring PSI Data systems from Group Bull SA, France and entered into a joint venture with Sun Life, Canada. It demerged the insulators business in 2002, and entered into a joint venture with NGK Japan and forayed into the Business Process Outsourcing (BPO) in 2003, by acquiring Transworks. Further, in 2005, the company increased its share in Idea Cellular and is operating in India with a market share of 11%. This illustrates that the company has been investing in an array of businesses over the past years and since 2001 has generated cash of Rs. 764 cr (Rs. 7.64 bn) from value businesses, which in turn, has been deployed in high growth businesses.