The Board of Directors of Aditya Birla Chemicals (India) Limited (ABCIL), a company of the Aditya Birla Group, recently approved the acquisition of the Chloro Chemicals Division (CCD) of Kanoria Chemicals & Industries Limited (KCIL) for a cash consideration of Rs. 830 crore . ABCIL is currently a chlor alkali producer with its plant located at Rehla in Jharkhand. With this acquisition, the total caustic soda capacity of ABCIL will increase from 105,000 tpa to 220,000 tpa.

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 March 31st 2010 stood at Rs. 303 crore.

Says Kumar Mangalam Birla, Chairman of the Aditya Birla Group, "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".

Avers Lalit Naik, Business Head for Chemicals, Aditya Birla Group, "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 external market. In addition, we also expect significant operational synergies on account of logistics and other cost savings."

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.

ABCIL 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.