Aditya Birla group company Aditya Birla Chemicals (India), says it is acquiring the chloro chemicals division of Kanoria Chemicals & Industries Limited (KCIL) for a cash consideration of Rs830-crore.

"The Board of Directors of Aditya Birla Chemicals (India) Limited (ABCIL), a company of the Aditya Birla Group, today approved the acquisition of the Chloro Chemicals Division (CCD) of Kanoria Chemicals & Industries Limited (KCIL) for a cash consideration of Rs 830 crore," the company said in a press release issued in Mumbai today.

The acquisitionwould raise the total caustic soda capacity of ABCIL from 105,000 TPA to 220,000 TPA.

According to the release ABCIL was a chlor alkali producer having its manufacturing facility at Rehla in Jharkhad and the transaction would take ABCI to a higher growth trajectory.

The release further said that the transaction is being made on a slump sale basis and would be subject to customary corporate and other approvals. The transaction is expected to be concluded towards end-May 2011.

KCI's chloro chemicals division (CCD) is located at Renukoot in UP and manufactures chlor-alkalis, chlorine derivatives and water treatment chemicals.

The facility's annual capacity for caustic soda manufacture stands at 1,15,000-TPA.

"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," the release said.

The CCD revenues for the year ended 31March, 2010 stood at Rs303 crore.

Aditya Birla Group's chairman, Kumar Mangalam Birla, said, "A compelling strategic fit, this acquisition further strengthens our 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."

"It is a critical input in the aluminium sector. Given our large expansion plans for our aluminium business, this serves as an excellent sourcing point, besides, of course, bolstering our capacity to service our customers.

The business has potential for both growth in revenues and earnings. I warmly welcome the strong team that comes along with this acquisition," Birla said.

ABCIL would finance the transaction through internal accruals and borrowings, according to the release.

Aditya Birla Group's business head for chemicals, Lalit Naik, said "the unit offers significant potential and infrastructure to expand the business which will serve the increasing need for caustic soda, both within our group and for the external market. In addition, we also expect significant operational synergies on account of logistics and other cost savings."

Formerly known as Bihar Caustic and Chemicals, ABCIL, is one of the leading chlor-alkali companies in eastern India.

The unit was commissioned in 1984, through various  expansions, caustic soda capacity today stands at 1,05,000 TPA.