India's Gujarat-based Welspun Power and Steel has announced that it will buy the sponge iron business of Grasim Industries, the flagship company of Mumbai-based Aditya Birla Group, for Rupees 10.30 billion (US$240.272 million).
Grasim's net profit in the first quarter of 2008 was Rupees 8.8077 billion (US$205.44 million).
Commenting on the transaction, executive president and business head of Aditya Birla Group Ravi Kastia stated, "Since sponge iron is not the group's core business, we decided to exit from the business and have a limited presence in the value chain of the steel business."
elspun is planning to combine its sponge iron business at Anjar in Guajarat with Birla's sponge iron unit in Maharashtra, and thereby increase its production.
Welspun Group owns three companies; Welspun India, Welspun Syntex and Welspun-Gujarat Stahl Rohren.