Speaking to this newspaper, Kumar Mangalam Birla, Chairman of Aditya Birla Group said: ``The idea is to restructure the India Foils balance sheet first. IFL needs a cash infusion of Rs 125 crore... despite good fundamentals, the company was making losses and Hindalco can provide the necessary inputs to grow the company.''

Adds Amit Chandra of DSP Merrill Lynch -- which brokered the deal on behalf of Hindalco: ``The small shareholders would benefit by holding the shares of a better leveraged company. India Foils has good fundamentals with a great future. The entry of Hindalco wouldresult in IFL shareholders holding shares of a better company.'' Small shareholders hold around 25 per cent stake in IFL while 51 per cent equity was held by B M Khaitan's Williamson Magor group.

The WM group will clean up the India Foils balance sheet by reversing investments made by the foil maker in Khaitan group companies through inter-corporate deposits and other borrowings within the next 18 months.

Birla said that Hindalco and its subsidiaries have purchased around 17.17 lakh shares of India Foils. After due diligence and obtaining statutory approvals, India Foils would allot 90 lakh shares and 55 lakh warrants to Hindalco's subsidiaries.

The price of each share will be Rs 45 and each warrant will convert in an one equity share at a price of Rs 45 within 18 months as per SEBI guidelines. With this, Hindalco and its subsidiaries will own 51 per cent equity of India Foils. The WM group will reduce its stake to 22.4 per cent after the deal.