Sbi May Scuttle Grasim & #39;S Bid For Up Cement Units

The Aditya Birla group flagship Grasim Industries' bid to acquire UP State Cement's units at Chunar and Dalla may hit a roadblock with the State Bank of India (SBI) questioning the valuation.

SBI is also demanding an interest component along with the principal loan amount it had given to the cement company.

Sources close to the deal said financial institutions led by IDBI and ICICI as well as other bankers have already given approval, barring SBI.

If a company is a Board of Industrial and Financial Reconstruction (BIFR) case, then normally the interest component is waived off but SBI is opposing the deal and is also insisting on the interest amount that the company owes to the bank, the sources said.

"However, it is in the interest of the lenders that a final call on the deal is taken at the earliest, in which case at least the recovery of the principal amount is assured," sources said. This is the second time that bankers are opposing UP State Cement's divestment programme.

Grasim's bid at Rs 241 crore is, however, higher than the minimum bid price. "The issue needs to be sorted out between the UP state government and SBI and it nowhere involves Grasim," they added.

Currently, Grasim is all set to conduct the due-diligence exercise. However, the deal can only proceed after the permission is granted by the Allahabad High Court.

The combined capacity of the two units is 1.5 million tonnes. The facilities are at present not operational. Grasim has trained its sight on becoming the country's largest cement producer post-acquisition of these units, and increase their capacity to 3.5 million tonne.