Bk Birla Being Wooed On Cement Sale

The Sudarshan Kumar Birla (SK) and Ganga Prasad-Chandra Kant (GP-CK) Birla groups are persuading Basant Kumar (BK) Birla to be a part of the proposed move to sell their cement units in unison.

The move is aimed at getting a better price as it could provide the acquirer a higher capacity and, more importantly, a good spread over the domestic market.

B K Birla is supposed to be in two minds as the "united sale" could help the acquirer to be the country's third largest cement maker with a capacity of a shed over 11 million tonne, which, in turn, would push his grandson's Grasim Industries to a uncomfortable situation, sources tracking the development said yesterday.

 

Birla Buildings sources said the proposed "united movement", if happens, will be beneficial to all the three parties in general, and S K and GP-CK groups in particular, as the two groups have been unable to sell their units for quite some time.

Sources said, "The united sale is a necessity for the SK and GP-CK Birla groups, as the leading international players are not interested in picking up companies with small capacity and confined to a particular region of the country. Individually, Mysore Cements of the S K Birla group and Orient Cement of GP-CK have failed to evince buyers' interest for their small capacity." While Mysore has a capacity of a shade over 2 million tonne, Orient's capacity is pegged at 1.1 million tonne.

"But the situation is different for B K Birla," sources said, "As there is no dearth of bidders to acquire his units having a combined installed capacity of 7.8 million tonne." Moreover, the acquirer could get the required spread over the domestic market as the seven units of the three companies, namely Kesoram Industries, Century Textiles and Mangalam Cements, are situated in Andhra Pradesh, Karnataka, Rajasthan, Maharashtra and Madhya Pradesh.

The capacity-wise ranking of the cement makers is: ACC (12 million tonne), L&T (12 million tonne) and Grasim (10.65 million tonne).