UltraTech, JSW in race to acquire India Cements' project in Madhya Pradesh

Aditya Birla group flagship UltraTech Cement is leading the race to acquire India Cements’ project in Madhya Pradesh, which is valued at Rs 800 crore, sources said.

Among other contenders for the project, which is on the block, include JSW Cement. E-mails sent to UltraTech and India Cements elicited no response until the time of going to press. JSW Cement said it had no comment to offer on the matter.

The deal, however, is expected to close anytime soon, ithe sources said. India Cements was contemplating a three-million tonne per annum plant in Madhya Pradesh last year and land acquisition for the same had begun. The project also has backward linkages to limestone, which is a key raw material in cement-making.

In May, the company had indicated that it was open to selling some of its land to reduce debt. As of March 31, 2022, India Cements had net debt of Rs 3,039 crore. This was an increase of 1.43 per cent over the previous year when net debt stood at Rs 2,996 crore. The company’s net debt to equity ratio stood at 0.53 for both FY22 and FY21, according to its annual reports for the respective years.

India Cements had indicated in its FY22 annual report that it had acquired 184.53 hectares of limestone-bearing land at Pawai Tehsil in Panna District of Madhya Pradesh. It had also acquired 68.55 acres of land in the Gaisabad Tehsil in Damoh District in the state to set up a cement plant.

In June, UltraTech had said that it would increase capacity by 22.6 million tonnes per annum (mtpa) through brownfield and greenfield projects. This would entail setting up integrated and grinding units as well as bulk terminals across the country, with commercial production from these units going on stream in a phased manner by financial year 2024-25 (FY25).

The company's current capacity stands at 120 mtpa. Inorganic growth is also on the priority list of Ultratech as it eyes a total installed capacity of around 160 mtpa in the next few years.

JSW Cement, on the other hand, intends to raise its capacity to 25 mtpa by FY24, from 17 mtpa at the moment, said experts.

“Both UltraTech and JSW Cement will continue to look at inorganic growth opportunities. However, there are not enough large targets to go after, following the Adani-Holcim deal, which has made Adani the second-largest cement player in the country at 70 mtpa,” said Manish Valecha, lead cement and construction analyst at Anand Rathi Securities.

Adani has already indicated that it wishes to double capacity to 140 mtpa in the next five years with a combination or organic and inorganic growth.