Bajaj Hindusthan may take over Balrampur Chini: Sources

The deal, whose value is seen at close to Rs 1,700-2,000 crore, is in the final stages of negotiation and could be announced next week, sources add. A deal of this magnitude will trigger an open offer in Balrampur Chini. The promoters of the company have a 37% stake.

Other sugar companies like US-based BUNGE, Singapore-based Olam International and Tata & Lyle are also learnt to be in the race.

Bajaj Hindustan currently has a debt of about Rs 3,000 crore on its books. If the deal goes through, its capacity should go up to 2 lakh tonne crushed per day and would give it a 33% share in the UP sugar market.

In a recent interview, Bajaj Hindustan's Kushagra Bajaj had said he was aiming to make his company the world's second largest sugar producer. Bajaj Hindustan recently raised Rs 723 crore via a qualified institutional placement.

Sugar prices in the past few months have been at an all-time high and sources say Vivek Saroagi, Balrampur Chini's promoter and MD may be looking to exit the company at the peak of the sugar cycle if he gets a good price. When he was recently asked about rumours about him talking to any company for a deal, he was elusive: "In business, we talk to a lot of people. You are right, I was and did clarify. There were many rumours then and now too," he said.

A recent development that fed the rumour mills was when Balrampur Chini did not buy 1 crore warrants - amounting to 4% stake in the company - offered to them at a price of Rs 92, which was much lower than the then ruling market price of Rs 105.

Balrampur Chini has officially declined to comment on the matter. Stocks of both companies opened positive on the stock exchange - about 2% up apiece.

- With inputs from CNBC-TV18's Varinder Bansal and Gautam Broker