Grasim to expand footprint through acquisition of chlor-alkali business

Grasim Industries has signed a definitive agreement to acquire the chlor-alkali business of K.P.R. Industries (KPR) by way of a slump sale for a cash consideration of Rs 253 crore. The transaction will be funded through internal accruals. KPR would use the proceeds from the sale to settle lenders' dues of Rs.253 crore under a one-time settlement. 

The business consists of an under-construction 200 TPD chlor-alkali project at Balabhadrapuram, Andhra Pradesh. Grasim would take over the assets and identified liabilities associated with the chlor-alkali business. Once operationalised, the project, along with other ongoing expansion projects, will enhance Grasim's caustic soda capacity to 1.22 MMTPA. 

Further, the purchase of a partially-completed project vis-à-vis a greenfield project will translate into a shorter time-to-market. The acquired business also has the potential for future expansions. 

According to the company filing, the company’s chlor-alkali division already operates seven state-of-the-art chlor-alkali plants pan-India. The completion of this chlor-alkali project in Andhra Pradesh will enable Grasim to serve the fastest growing market of caustic soda in India and it will also be a catalyst for growth of the chlorine downstream sector in Andhra Pradesh. 

The stock of Grasim on Tuesday’s trading session surged nearly 2.3 per cent to intra-day high of Rs 723.35. At 15.17 hours the stock was trading at Rs. 716.35, up by 2.3 per cent from the previous close.