Oman’s Raysut Cement to invest $700 m in India; earmarks $200 m for two acquisitions

Raysut Cement Company, Oman’s largest cement manufacturer, plans to invest about $700 million (nearly ₹5,000 crore) in India by 2022, of which $200 million has been earmarked to acquire majority stakes in two Indian cement producers. The acquisitions will happen in the first quarter of calendar 2019.

The move will help the company move upstream and become a manufacturer of cement in India, a shift from its present status of being a supplier of clinker and limestone.

The investment is part of its plans to expand its overall production capacity to 20 million tonnes (mt) per annum, while the Muscat Securities Market-listed firm is also scouting for acquisitions in Africa.

“We are in discussions to invest in two existing cement companies, one of them in Chhattisgarh and the other in Gujarat’s coastal region. We will invest a total of $200 million in these two companies by the first quarter of calendar 2019 and acquire a controlling stake of about 75 per cent,” Raysut Cement Chief Executive Officer Joey Ghose told BusinessLine.

“Further, we will invest another $400-500 million to expand these companies’ businesses over the next four years, based on certain milestones,” he added.

Ghose, however, declined to reveal the names of the companies, citing non-disclosure agreements.

Capacity expansion

Both of these are small firms with 1.2 mt capacities, and following the investments their capacities will be increased to 5 mt by 2022.

The company intends to sell its products from the Gujarat plant in the domestic market. In case there is surplus production, it may look to export to Sri Lanka. However, Chhattisgarh being land-locked, the produce will be sold only in the domestic market.

“We have been focussing on high-growth markets and we are seeing that India has a significant potential in the next 20 years. We would also like to participate in the country’s infrastructure development and economic growth,” said Ghose.

At present, Raysut is the largest limestone and gypsum supplier to western India, while it recently started supplying gypsum to the southern markets.

Raysut is also planning to acquire a 70 per cent stake in Kenya’s ARM Cement with an estimated $100-million investment. It is also in discussions to acquire various cement producers in Uganda and Djibouti, and is planning to build a 1 mt cement plant in Berbera, Somalia.

Global push

“We are looking to becoming a global company by way of expansion, and moving with a major focus on East and Central Africa and Georgia,” Ghose added.

The company also holds a majority stake in Pioneer Cement Industries Georgia.

With these expansion plans — which will be funded through internal accruals and bank loans — the company intends to more than triple its production capacity to 20 mtpa from the present 6 mtpa.

Raysut cement is also in the process of setting up a grinding unit in Somaliland and Mogadishu, Somalia, with a Dubai-based partner.