Kumar Birla set to buy Chinese phosphate firm

Acquisition may revive group's overseas buyouts.

Three years after it entered China by taking over a carbon black unit, the Aditya Birla group is close to another acquisition in the country. The group is in advanced stages of negotiation to buy the majority stake in a Chinese rock phosphate company.

Sources said the acquisition could happen within two months.

Rock phosphate is used to produce phosphoric acid for ammoniated phosphate fertilisers, feed additives for livestock, elemental phosphorus and a variety of phosphate chemicals for industrial and home consumers.

Observers said this acquisition might revive the group's overseas buyouts, which slowed down considerably in 2005. The group acquired only one firm, St Anne Nackawic Pulp Mill in Canada, for Rs 450 crore last year.

On the other hand, the country's second largest business house, the Tata group, did overseas shopping worth almost Rs 4,500 crore in 2005.

When contacted, an Aditya Birla group spokesperson declined to comment on the development. "It's not the group's policy to comment on speculation," she said.

But the sources said the Aditya Birla group will take a majority stake in the Chinese company, while the local promoter will hold the remaining shareholding. The group has realised that the country's language and specific work culture will make it difficult for a solo effort.