The Board of Directors of Aditya Birla Chemicals (India) Ltd ("ABCIL"), a company of the Aditya Birla Group, have recently (Sep 8, 2014) approved the acquisition of the Chlor-Alkali Division ("CAD Division") of Jayshree Chemicals Limited ("JCL") for a cash consideration of Rs.212 crore. This transaction takes ABCIL to a higher growth trajectory.

CAD is an environment friendly and energy efficient membrane cell facility located at Ganjam, Odisha and also has about 1,600 acres of salt works in Andhra Pradesh. The current capacity of the facility is about 57,000 tonnes per annum.

CAD is cost competitive, driven by strengths of the latest state-of-the-art technology. JCL's revenue for the year ended 31 March 2014 stood at Rs.136 crore. With this acquisition, the total caustic soda capacity of ABCIL will increase to about 3,55,000 tonnes per annum.

"The acquisition is strategic and further strengthens our position in the Chlor-Alkali Business. It will take our Chlor-Alkali Business on a higher growth trajectory. The acquisition solidifies the Group's position as the country's largest producer of Chlor-Alkali and bolsters caustic soda supply, which is a critical input for the Aluminium Business. The Business has potential for future growth," said Kumar Mangalam Birla, Chairman of the Aditya Birla Group.

"We expect significant operational synergies on account of cost savings. The acquisition cost and proposed capital expenditure will be funded through a mix of internal accruals and debt," stated Lalit Naik, Sector Head for Chemicals, Aditya Birla Group.

Caustic soda is one of the essential inputs for the manufacture of alumina. It is also used widely in various other industries. CAD's manufacturing facility is strategically situated in the state of Odisha and is in proximity to various aluminium manufacturing facilities, which provides significant growth opportunities.

The transaction is subject to statutory and regulatory approvals.