Comments
Emami Group on Friday said it has sold its cement business, Emami Cement, to Nuvoco Vistas, part of the Nirma Group, for an enterprise value of ₹5,500 crore. The move is aimed to reduce debt at the group level.
In a release, Emami Group said that “it has entered into a binding agreement with Nuvoco Vistas Corporation Limited for divestment of its 100 per cent equity stake”.
Emami Cement operates an integrated cement plant in Risdah, Chhattisgarh; and grinding units in Bihar, West Bengal and Odisha with a total installed capacity of 8.3 million tonnes per annum. It has mining leases in Chhattisgarh, Rajasthan and Andhra Pradesh.
Post acquisition, Nuvoco’s total cement capacity in Eastern, Northern and Western India will rise to 23.5 mt. This includes the ongoing capacity expansion project at its Jojobera plant in Jamshedpur and over 60 ready-mix plants. The combined operations will span three facilities in Chhattisgarh, two each in Rajasthan and West Bengal, and one each in Bihar, Jharkhand, Odisha, and Haryana.
Nuvoco’s cement sales will spread across Chhattisgarh, Odisha, West Bengal, Bihar, Jharkhand, Rajasthan, Madhya Pradesh, Gujarat, NCR region, Punjab, Uttar Pradesh and Haryana.
Nuvoco has a substantial presence in slag cement in the East and a strong portfolio of PPC (pozzolona Portland cement) and OPC products (ordinary portland cement).
According to Nuvoco Chairman Hiren Patel, this acquisition is a transformational step in Nuvoco’s journey to becoming a major building materials company. “The acquisition will enable us to take our cement business to the next level, and continue to serve our customers with innovative and high-quality products that they trust,” he said as per a release issued by the company.
Debt reduction
According to Manish Goenka, Director, Emami Group, the transaction is an important step in the Group’s stated objective of becoming debt-free. Once the sale is through, the promoter debt at a group level will come down to ₹600 crore.
“With this transaction, we will substantially achieve this objective (of being debt free),” he said.
Sources in Emami Group say that of the ₹5,500-crore enterprise valuation, ₹2,000 crore will go towards paying off accumulated debts in Emami Cement, while another ₹1,000 crore will be used to clear unsecured loans. The promoters will have another ₹2,500 crore to redeem their pledged shares.
Kolkata-based Emami Group, it may be recalled, has been trying to reduce debt at the group level and also release pledged promoters shares .The promoters — Agarwal and Goenka families — had sold nearly 20 per cent share in its group flagship and the FMCG arm, Emami Ltd, last year to raise around ₹2,830 crore.
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.