Aditya Birla Chemicals acquires Chloro Chemicals Division

The Board of Aditya Birla Chemicals (India) Limited, a company of the Aditya Birla Group, approved the acquisition of the Chloro Chemicals Division (CCD) of Kanoria Chemicals & Industries Limited for a cash consideration of Rs.830 crore. Aditya Birla Chemicals is currently a chlor alkali producer with its plant located at Rehla in the State of Jharkhand.

This transaction takes Aditya Birla Chemicals to a higher growth trajectory. CCD is a state-of-art-facility located at Renukoot, Uttar Pradesh, manufacturing chlor-alkalis, chlorine derivatives and water treatment chemicals. The current annual capacity of caustic soda at the facility is 115,000 tons per annum.

CCD is highly cost competitive, driven by strengths of the latest manufacturing technology, captive power plants with coal linkage and forward integration into value adding chlorine derivatives. CCD’s revenues for the year ended 31 March 2010 stood at Rs.303 crore.

Mr. Kumar Mangalam Birla, Chairman of the Aditya Birla Group said as a compelling strategic fit, this acquisition further strengthens the Group’s standing in the chlor alkali / caustic soda sector. This acquisition solidifies the Group’s position as the country’s largest producer of chlor alkali, said Birla.

It is a critical input in the aluminum sector, noted Birla. Given Birla’s large expansion plans for its aluminum business, this serves as an excellent sourcing point besides, of course, bolstering its capacity to service its customers, he said.

Avers Mr. Lalit Naik, Business Head for Chemicals, Aditya Birla Group said the unit offers significant potential and infrastructure to expand the business, which will serve the increasing need for caustic soda, both within the Group and for external market. In addition, the group expects significant operational synergies on account of logistics and other cost savings, said Naik.

Caustic soda is one of the essential inputs for the manufacture of alumina and is also used widely in various other Industries. CCD’s manufacturing facility is located in Renukoot, in the State of Uttar Pradesh. Over and above the existing demand in alumina in that region, several new alumina manufacturing facilities are also coming up in the eastern part of India, which provides significant growth opportunities.

Besides, there is growing demand for the chlorine derivatives. Aditya Birla will finance the transaction from internal accruals and borrowings. The transaction will be done on a slump sale basis and is subject to customary corporate and other approvals, and is expected to be completed towards the end of May 2011.

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