Birla Corporation announced that is has completed the acquisition of Reliance Infrastructure subsidiary, Reliance Cement. The deal was valued at about INR48bn (US$715.6m). Reliance Cement becomes a wholly-owned subsidiary of Birla, whose production capacity now reaches 15.4Mta, up from 9.8Mta, as a result of the deal.
Reliance Cement operates a 5.08Mta integrated capacity at Maihar (Madhya Pradesh) and Kundanganj (Uttar Pradesh) as well as a 0.5Mta grinding unit at Butiburi (Maharashtra).
Birla Chairman, Harsh V Lodha, commented on how the company will be looking to enhance its presence in the west Indian market by expanding the Mukutban operations. The mining lease at Mukutban would allow the company to set up a 3Mta clinkerisation unit. Mr Lodha spoke on the acquisition, saying, "The economies of scale and synergies would help the company invest in brand, channel, manufacturing, product and marketing innovations for creating greater value for all stakeholders. This apart, there is scope for further optimisation of the operation of Reliance Cement that would yield substantial benefit to the company."
Of the INR48bn involved in the Birla-Reliance deal, Reliance Infrastructure intends to use the entirety to reduce its debt, which stood at INR155bn (US$2.31bn) in March 2016. In a bid to reduce its debt, the company has been actively pursuing asset sales.
