The additional 10 per cent stake will be acquired from Grasim Industries, the company has informed the Bombay Stock Exchange (BSE).

The transfer of 7.8 lakh equity shares will be made at Rs 13 per share, aggregating to a total consideration of over Rs 1 crore. Hindalco currently holds 10 per cent equity in BCCL. With this acquisition by Hindalco, Grasim Industries will make an exit from BCCL.

The move is part of the restructuring exercise of the Aditya Birla group with a view to consolidate its investments in BCCL under one company. A spokesperson from the Aditya Birla group said that Bihar Caustic being a key supplier of caustic soda to Hindalco, and with the aluminium major accounting for over 80 per cent of caustic soda sales of BCCL, there will be better synergies in consolidating the group's holdings under Hindalco Industries.

Another reason for this inter-group transfer of holdings is to reduce inter-company holdings, the spokesperson said.

The group has a 25 per cent holding in BCCL, which is based in Jharkhand. Post-acquisition, Hindalco will hold 20 per cent in the company. Another investment arm of the group, Pilani Investments, holds a five per cent stake in BCCL.

Financial Institutions and public holdings together hold 49 per cent in BCCL and the remaining 26 per cent is held by Bihar Industrial Development Corporation (BIDC).

The company had recently sought financial assistance from institutions to meet part of the cost of its captive power plant at Garhwa in Palamau, where the company's plant is located.

Electricity, the critical input for the caustic soda plant, is not available at economical rates. In the previous year, BCCL suffered on account of frequent interruptions in power and steep increase in power costs on retrospective basis. This sitituation has, therefore, forced BCCL to go in for a captive power plant.

Significant progress has now been made on the installation of a 30 MW captive plant. Work on the plant commenced in early 1999.