Sources close to the deal told The Financial Express that Kothari Sugars was asking for a gross consideration (without taking over liabilities) of around Rs 150 crore. This was unacceptable to EID Parry. The company, it is learnt, had informally offered a price of Rs 85 crore without the division's liabilities to the Kotharis.

When contacted, EID Parry director MA Alagappan said: ``We are no longer in the race for buying out the sugar division of Kothari Sugars. We have taken this decision because of our other commitments.'' The official declined to comment on the differences between the two companies on price saying ``we have been engaged in discussions with them, but have not offered any firm quotation for the division.''

Officials from EID Parry had visited the Kothari Sugars plant toevaluate the assets of the Rs 50- crore division. Kothari Sugars, sources say, had also simultaneously asked for a price of Rs-90 crore, along with the division's liabilities, but the Murugappa group declined to revise their offer price upwards.

The exit of EID Parry leaves French sugar major Eridania Beghin-Say as the only contender to buy-out the Kothari Sugars' division. EID Parry has been on the prowl to hike capacities and augment its sugar capacity. The buy-out of Cauvery Sugars was a step in that direction. The Rs 950- crore company was also in the race to take over Aruna Sugars, which eventually did not materialise.

The company, say sources, is having second thoughts to add capacities at a very high cost as the immediate does not seem too rosy for the industry.

The sale of the sugar division, on the other hand, is of critical importance for Kothari Sugars & Chemicals which is set to take up a restructuring exercise to stay focussed on its chemicals business. Besides sugar, the company has twoother divisions -- chemicals and petrochemicals, which it proposes to merge at a later stage. The sugar division, which contributes over 30 per cent to the company's sales turnover, and has an installed capacity of 4000 tonnes crushed per day. The sugar unit is located at Kattur in Tamil Nadu.