Lafarge's Indian unit has scrapped an agreement to sell two of its cement units to Birla Corp, the latter  said in an exchange filing.

On Tuesday Birla Corp said in a notice to the Bombay Stock Exchange that it had now been informed about Lafarge India's "inability to proceed" with the transaction. After consultation with lawyers, the company “has decided not to accept their contention and is in the process of taking appropriate legal measures,” it said.

In August last year, LafargeHolcim announced that it had entered into an agreement with Birla Corp Ltd for the divestment of certain assets in India for an enterprise value of INR50bn (approximately US$765.8m). The assets comprised the Sonadih cement plant and Jojobera grinding station in eastern India with a combined cement capacity of 5.15Mta.

However, the deal was thrown into doubt due to mining regulations. Existing laws in India allow the lease transfer of limestone mines only if the “entire company” is bought and not if a particular asset in the company is bought. JP Morgan notes that LafargeHolcim is unlikely to face regulatory hurdles if it divests entire Lafarge’s portfolio (11Mt) in India and this disposal will be a part of the announced CHF3.5bn (US$3.44bn) programme.