Comments
Cement manufacturer Dalmia Bharat Enterprises Ltd is set to strengthen its presence in the North East with the Rs 560-crore acquisition of Adhunik Cement Ltd.
This is Dalmia Bharat’s second acquisition in the region after it took a 50 per cent stake earlier this year in Calcom of Assam.
Dalmia Bharat hopes to establish over 3.5 million tonnes of production capacity in the region where the demand is estimated at about 6 million tonnes a year and growing at a healthy 12-15 per cent, says Puneet Dalmia, Managing Director. The company has announced on the NSE that its subsidiary Dalmia Cement (Bharat) Ltd has signed a definitive agreement to buy the entire share capital of Adhunik Cement in Meghalaya for Rs 560 crore. Adhunik operates a 1.5 million tonne a year cement plant, which is one of the largest in the North East. Dalmia said it is operating at about 40 per cent capacity. The acquisition is to be funded through internal accruals and reserves. Dalmia Bharat’s other acquisition in the region, Calcom, has a 800,000 tonne a year cement plant which is to be expanded to about 2 million tonnes a year.
The company’s two acquisitions in the North East mean an equity exposure of over Rs 800 crore and an additional Rs 1,000 crore in the form of debt and other liabilities.
As of now both these plants are “not making money at the profit after tax level” but Dalmia Bharat is optimistic. The demand is driven by infrastructure growth. A number of hydel projects are coming up, infrastructure like roads and bridges is being built, and money is flowing into the region to drive inclusive growth.. “That is why we like the North East,” Dalmia said and added that as the sole national level player in the region, with a distributed presence, it is well set to tap the demand.
In the South, the company has started work on a 2.5-million tonne a year cement plant in Belgaum, Karnataka, at a cost of Rs 1,300 crore. A second unit is planned in Gulbarga. Dalmia Bharat has nearly 14 million tonnes a year of cement production capacities, including about 9 million tonnes in Tamil Nadu and Andhra Pradesh, and about 4.5 million tonnes in the eastern region through its stake in OCL.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.