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Grasim plans to buy two cement units

Diversified Grasim Industries Ltd, India's third largest cement maker, is in talks with Uttar Pradesh State Cement Corporation for buying its two cement plants, a source close to the deal said on Friday.

"The due diligence is going on," the source said, but declined to elaborate.

He was responding to a report in published in an economic daily, which said Grasim has taken over the Dalla and Chunar units from the state-run company for Rs 2.41 billion.

A company spokeswoman declined comment.

The two units are located in Uttar Pradesh.

According to industry apex body Cement Manufacturers Association, Dalla has a capacity of 0.43 million tonnes per annum and Chunar 1.68 million tonnes.

Grasim, which has interests in cement, viscose staple fibre, sponge iron and caustic soda, unveiled earlier this week investment plans worth Rs 4.74 billion in the cement business over the next 18 months.

The newspaper report said the company was the lone bidder after the state government of Uttar Pradesh fixed a minimum sale price of Rs 1.95 billion.

Grasim will additionally pay Rs 350 million as staff separation costs and Rs 110 million to retire other debts.

The paper said the two ailing units had been shut since early 1998, and the workers had been unpaid since August 1998.

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