Gwalior Chemicals, a manufacturer of niche chemical products, has entered into a definitive agreement with Lanxess for sale of its chemicals business for an aggregate value of Rs 536 crores or Euro 82.4 million, on a cash and debt free basis.

However, the transaction is subject to shareholder's approval and necessary merger control clearance from relevant authorities in various countries.

Under the arrangement, Lanxess will acquire the entire chemicals business including the manufacturing assets at Nagda, Madhya Pradesh and the wind power business located in Maharashtra and Madhya Pradesh.

However, GCIL will retain the manufacturing site at Ankleshwar, Gujarat, after the current chemical activities of the business have been relocated to Nagda.

GCIL stated in a communiqué that, it will invest the sale proceeds in power generation business and manufacturing of high value specialty chemicals (at Ankleshwar) for which products have been identified.

The process is expected to be completed by 30th of September 2009.

LANXESS is a leading specialty chemicals company with sales of EUR 6.58 billion in 2008 and currently employs 14600 professional in 23 countries.  The core business of the company is the development, manufacturing and marketing of plastics, rubber, intermediates and specialty chemicals.

Reacting to latest announcement, the shares of Gwalior Chemical settled the day at Rs 107, up 4% compared to its previous close.