Nirma Ltd. has agreed to acquire Lafarge India’s cement assets for about $1.4 billion (Rs.9,400 crore), outbidding Sajjan Jindal-led JSW Cement and Piramal Enterprises, as Indian companies vie to add capacity for the building material to tap growing demand from the infrastructure sector.
LafargeHolcim, the Swiss building materials behemoth created out of the 2015 Lafarge-Holcim merger, will sell its Lafarge India business including three plants and two grinding units with a total capacity of about 11 million tonnes per annum (MTPA) to Nirma, subject to approval by the Competition Commission of India (CCI), the Zurich-based company said in a statement.
Nirma, the Ahmedabad-based detergents and chemicals maker, currently operates a 2 MTPA cement unit. The additional capacity will help it benefit from an expected surge in infrastructure construction as India aims to boost spending on the key sector to about 8.1 per cent of GDP by 2021-22, according to an IMF Working Paper. Nirma, which will fund the acquisition through an equal mix of equity and debt, expects the acquisition to be “transformational” for its cement business, Managing Director Hiren Patel said.
“With a strong platform like Lafarge’s India business, we plan to take the cement business to the next level,” Mr. Patel said. LafargeHolcim will use the divestment proceeds to pare debt, it said. The agreement, part of the cement major’s 3.5 billion Swiss franc divestment plan, is a key requirement for the company to win approval from India’s competition regulator for the worldwide merger announced last year. “We are confident that we will meet our target by the end of this year,” said Eric Olsen, CEO, LafargeHolcim. “With the proposed buyer we have found the right partner who will be able to develop the business further in the interest of all our stakeholders,” Mr. Olsen said.
LafargeHolcim will continue to operate in India through ACC Ltd. and Ambuja Cements Ltd. with a combined capacity of more than 60 million tonnes and a nationwide distribution network, making it the second-largest cement player in the country. Kumar Mangalam Birla-led UltraTech Cement is the market leader.
Source: The Hindu