India's diversified Aditya Birla Group said on Saturday it had acquired a unit of local chemicals maker Kanoria Chemicals & Industries for 8.30 billion rupees ($187 million) in an all-cash deal.

Aditya Birla Chemicals (India), a unit of Aditya Birla Group, will buy the chloro chemicals division of Kanoria Chemicals to boost its production capacity, the company said in a statement.

Revenue for Kanoria's chloro chemicals division, which makes chlor-alkalis, chlorine derivatives and water treatment chemicals, was at 3.03 billion rupees for the year that ended on March 31, the statement said.

The deal will make Aditya Birla Group the country's largest producer of chlor-alkali, a critical input in the aluminium sector, the group's Chairman Kumar Mangalam Birla said in a statement.

 "Given our large expansion plans for our aluminium business, this serves as an excellent sourcing point besides, of course, bolstering our capacity to service our customers," he said.

"The business has potential for both growth in revenues and earnings."

The Aditya Birla Group companies include India's No. 1 aluminium producer Hindalco Industries, which acquired Canada's Novelis for $6 billion in 2007.

The transaction, which will be funded through Aditya Birla Chemicals' cash balance and borrowings, is likely to be closed by end of next month, the Aditya Birla Group statement said.

Shares in Aditya Birla Chemicals closed up 1.5% at 135.30 rupees on Friday in the Mumbai market that fell 1.5%. Kanoria Chemicals ended 20 percent higher at 41.20 rupees.

The Mumbai-based Aditya Birla Group has interests ranging from telecom to retail and is led by Kumar Mangalam Birla, listed by Forbes as India's seventh-richest man with a net worth of $9.2 billion.

The group has been looking at mergers and acquisitions to boost growth of its various businesses.

In January, it announced the acquisition of U.S.-based Columbian Chemicals for $875 million, doubling its capacity and boosting its position to the largest carbon black manufacturer in the world.

The Indian conglomerate is also among parties looking at buying the $3.7 billion Australian coal miner Whitehaven Coal , sources told Reuters last month.