Grasim, Lafarge in race for UP cement unit

Grasim, an Aditya Birla group company, and Lafarge, the French cement multinational, are once again set to compete for the assets of the UP State Cement Corporation (UPSCCL).

They have competed earlier also, the only difference being that this time they are not alone. There are two others in the fray. These are Dalmia Cement (Bharat) Ltd and cement major Jaypee Industries, turning the battle into at least a triangular contest, if not a four-cornered one.

The floor price for auction has been kept at Rs 271 crore, which is Rs 40 crore higher than the price at which the previous deal between the UP government and Grasim was concluded.

But that deal was annulled by the Allahabad High Court on the grounds that the state had no authority to sell the assets of the company when it was under liquidation by the orders of the High Court. The latter ruled that the assets be re-auctioned, this time through the formation of an asset sale committee, thus paving the way for the present expression of interest, which is to be followed by bidding.

The UP State Cement Corporation Ltd was incorporated in 1972 and had its production units at three places""Dalla, Chunar, and Churk""in District Mirzapur in UP. It had an installed capacity of 1.680 million tonnes of cement.

Mulayam Singh Yadav in his first term as chief minister (1989-91) had advertised for the privatisation of four PSUs in the state, the cement unit being one of them.

However, resistance by workers led to a firing at Dalla in 1991, leading to deaths and ultimately to the defeat of Mulayam Singh Yadav's party in the next elections.

Kalyan Singh's government after initial resistance cancelled the deal with Sanjay Dalmia over the sale of the unit. But the unit after one year went into losses and in three years, the losses mounted to such an extent that it had to be closed down.

Soon thereafter the Uttar Pradesh government even stopped paying salaries, which led to some hunger deaths. But the deal between Grasim and the UP government was opposed by Lafarge. Ultimately the High Court cancelled the deal.

Grasim had chalked out a plan for investment of about Rs 400 crore for a new plant after scrapping the present one.