Birla Corp is reportedly looking to acquire Reliance Infrastructure's cement business for Rs 5,000 crore. Birla is being seen as the frontrunner following competition from other private equity companies in the race.
Birla Corp is perhaps the only potential buyer engaged in advanced talks with Anil Ambani-owned Reliance Cement, sources told The Economic Times. According to reports, the Kolkata-headquartered company is said to have offered Rs 5,000-5,100 crore, in line with the Reliance Group's expectations. Various other companies, such as Jindal Steel Works Cement, JK Lakshmi Cement and Carlyle and China Resources Cement Holdings are also in the bidders' list.
All the companies submitted their final bidding price to Reliance on Christmas day last month. The final decision is expected to be taken in a fortnight, and the official announcement will follow next week.
Reliance Infrastructure (RInfra) has projects in various sectors such as roads, metro rail and cement. Its cement company has a total installed capacity of 5.8 million tonnes per annum (mtpa) of which 2.8 mtpa is located in Madhya Pradesh and 2.2 mtpa in Uttar Pradesh. The company is reportedly planning to increase its cement production capacity and build new cement plants in Maharashtra and MP, according to its official website.
The Anil Ambani-owned RInfra Group also distributes power to over 60 lakh consumers in Mumbai and Delhi.
Established in 1919, Birla Corp belongs to the MP Birla Group, which is involved in cement and jute projects that account for approximately 90% of the company's revenue. The company has an operational capacity of 9.3 million tonnes per annum, with units spread across Madhya Pradesh, West Bengal, Rajasthan and UP, The Economic Times report added.
"As part of our ongoing asset monetisation plans, we are at an advanced stage of discussions with potential buyers for divesting the cement business of the company. The proceeds of the disinvestment will be utilised for reduction of the overall debt of the company," A Reliance Cement spokesperson told IBTimes India.
Birla Cement did not respond to IBTimes India's queries.