Reliance Infrastructure is in advanced stage of negotiations to sell its cement business in an about Rs 5,000-crore deal and M P Birla Group firm Birla Corporation is one of top three potential buyers.
Besides Birla Corp, private equity firms Blackstone and Baring are the other top contenders, people in know of the development said.
The Mumbai-based firm has been in talks with prospective buyers — both domestic and foreign — to sell its cement and road business, in which it has invested over Rs 15,000 crore, that will be utilised to cut debt and also to fund its foray into defence manufacturing.
The Anil Ambani-led firm had zeroed-in on seven potential buyers, which included Carlyle and KKR, out of the initial offers from 15 contenders.
In a regulatory filing today, Reliance Infra said: “We are at an advanced stage of discussions with potential buyers for divesting the Cement business. The proceeds of divestment will be utilised for reduction of the overall debt.”
Reliance Infra’s debt stood at around Rs 25,100 crore at March 31, 2015.
Reliance Cement, which has an annual capacity of 5.5 million tonnes, started operations in 2007. It has plants at Maihar in Madhya Pradesh (2.8 million tonne per annum), Kundanganj in Uttar Pradesh (2.2 MTPA) and Butibori in Maharashtra (0.5 MTPA).
Meanwhile in a BSE filing, Birla Corporation said: “With a view to expand cement business, the company keeps on evaluating and discussing various opportunities as may be available from time to time.
“However, no proposal has reached the stage, which would merit intimation under the Listing Regulation.”
Birla Corp’s has a total operational cement capacity of about 10 MTPA with units in Rajasthan, Madhya Pradesh, Uttar Pradesh and West Bengal.
Shares of Reliance Infrastructure today rose by 0.34 per cent to settle at Rs 583.65 apiece on the BSE. Birla Corporation fell by 0.64 per cent to close at Rs 444.15 per share.