Nirma to buy part of Lafarge's cement units for $1.4 bn

In another major deal in India's cement space, Karsanbhai Patel-led detergents major Nirma is set to buy a part of LafargeHolcim's units in the country for $1.4 billion, having a total capacity of 11 million tonnes, it was announced on Monday.

Lafarge India, one of the group's main subsidiaries in India, operates three cement plants and two grinding stations with a total capacity of around 11 million tonnes per annum. These will be sold to Nirma, subject to approval by the Competition Commission of India.

"This agreement is an important step in our 3.5 billion Swiss franc ($3.7 billion) divestment program. With this deal, two-thirds of the program has been secured and the remainder of the program is well on track," said Eric Olsen, Chief Executive of LafargeHolcim.

The deal comes less than 10 days after debt-ridden Jaiprakash Associates said it has entered into a pact with UltraTech Cement to sell its cement units with a capacity of 17.2 million tonnes for an enterprise value of Rs.16,189 crore ($2.4 billion).

The sale does not mean LafargeHolcom's exit from India.

Through its other subsidiaries, ACC Ltd and Ambuja Cement, the group will continue to be a dominant player in the country with a combined capacity of more than 60 million tonnes and a distribution network that extends across the entire country, a statement issued by the group said.

For Nirma, the deal majorly adds to its existing cement capacity. It already has a presence in Rajasthan and the acquisition will ramp up its capacity to around 13.5 million tonnes. This apart, Nirma has proposed another cement unit in at Mahuva in Gujarat.

For the France-headquartered group, this deal will prove second-time lucky.

In August last year, LafargeHolcim had entered into an agreement with Birla Corp for the divestment of some cement units with a capacity of 5.15 million tonnes, including the plant at Sonadih and grinding station at Jojobera in eastern India.

Then in February this year, the company said it was no longer in discussion with Birla Corp and was looking at a sale of assets involving an annual cement capacity of around 11 million tonnes, also subject to an approval of the country's anti-trust commission.

"Due to the current regulatory issues relating to the transfer of mining rights captive and critical to the two plants, LafargeHolcim was obliged to submit an alternate remedy to the CCI to ensure compliance with the order," the company had said.

Better known for its detergents, Nirma also has a presence in products such as soaps, salt, soda ash, caustic soda, cement and packaging. With over 12 manufacturing facilities in India and the USA, Nirma sells its products across the globe and reported a sales figure of over $ 1.1 billion in 2015-16.

--IANS

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