The Binani group, it is learnt, is close to sealing a deal with DLF promoter Rajiv Singh. No confirmation of the fact was available from the companies, which did not respond to queries from The Financial Express.

Market sources say that the discussions are believed to have thrown up a mutually agreed price of Rs 8 per share, although analysts were sceptical about such a price. The deal, they point out, will involve transfer of the Rs 380 crore plus debt of DLF Cement to the Binani group's new cement subsidiary, Binani Cement. The cynicism, of course, is in case financial institutions refuse to write off the huge loans owed by DLF, say the analysts. DLF Cement closed at Rs 5.90 on the Bombay Stock Exchange yesterday.

DLF Cement has been on thelook-out for a buyer for a while. Talks with Gujarat Ambuja fell through some time ago due to reported differences on the price front, where the huge debt burden proved to be the contentious issue. DLF had asked for a price of around Rs 185 crore, and sought a simultaneous debt transfer, which proved unacceptable to Gujarat Ambuja.

DLF Cement, whose plant is located at Pali in Rajasthan, recorded a net loss of Rs 52 crore in 1997-98, and has been facing a serious cash flow problem. Although ICICI and IDBI reportedly agreed to reschedule loans worth around Rs 90 crore by extending the repayment period to 2002, Washington-based International Finance Corporation refused to reschedule its aggregate dues of around Rs 100 crore.

DLF has already decided to reschedule the terms of interest payout and redemption payment for its multi-option convertible debentures issued in 1994 at Rs 85 for cash at par, citing losses as reason. Besides, the project went on stream after a 15-month time overrun in November1997.

Analysts say that a debt burden of Rs 380 crore makes the possible price of Rs 8 per share too high. "The DLF Cement plant is located at the cement surplus state of Rajasthan, where units command a 40 per cent discount over the replacement cost. At an offer price of Rs 8 per share, the price of the cement plant (after transfer of the debt), translates into Rs 3,428 per tonne, which is way above the going rate of Rs 2,600 per tonne," said an industry analyst.

If the deal does transpire, however, the Binani group will emerge a major northern Indian producer with a capacity in excess of 3 million tonnes. The group has already identified cement as a key growth area, and a possible buyout of the DLF unit, which is very close to the Binani unit at Pindwara in Rajasthan, will further streamline operations.

Industry watchers feel that transfer of the hefty debt will skew Binani Cement's finances, as the debt-equity ratio will shoot up to disproportionate levels. Binani Cement, with an equity base of Rs200 crore, has an installed capacity of 1.65 million tonnes, along with a 25mw captive power plant.