Under a scheme of arrangement, the cements division of Indian Rayon would be transferred to Grasim. And this would also entail Indian Rayon to transfer a Rs 437 crore debt to Grasim that the company now services. This has been a drain on the company's bottomline for sometime now. With this debt going into Grasim's books, Indian Rayon's debt-equity ratio will improve substantially and the interest outgo will be lower. This is expected to lead to substantial improvement in Indian Rayon's performance, once the transfer of cements division is complete. For Grasim, the transfer would mean an additional portland cement capacity to the tune of 3 milliontonnes per annum and 360 tonne per annum capacity in white cements.

Grasim would also have ready access to Southern markets, where Indian Rayon has a strong presence. Since the market overlapping between the two is limited to only 10% level, transfer will give Grasim a wider market penetration. According to the arrangement, Indian Rayon shareholders in Indian Rayon will get 3 shares of Grasim for every 10 shares currently held by them.