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Sinoma International Engineering (Hong Kong) Co Ltd, part of the Chinese state-run National Materials Group Corporation Ltd (Sinoma), has entered into the Indian cement equipment industry by acquiring a majority stake in Chennai-based cement equipment manufacturer LNV Technology Pvt Ltd (LNVT) for Rs 130 crore.
Sinoma International currently occupies around 80% market share in the Chinese cement equipment industry and around 40% in the international market except China.
According to the agreement, Sinoma International Engineering has a share of 68% in LNV Technology, which has become a member of the Sinoma Group, while the erstwhile joint venture partners V C Rao, managing director of the company and LV Technology Public Co Ltd holds around 16% equity share each in the company.
V C Rao had around 51% equity share while LV Technology had 49% equity in the company before the deal.
The Chinese firm would bring in its expertise in R&D, design, manufacturing, installation and after sales service to the Indian Joint Venture, said Liu Zhijiang, group chairman, China National Materials Group Corporation Ltd (Sinoma).
The company choose to make entry into the market by having equity cooperation with LNVT, in the aim of better providing services to its Indian clients and satisfying the need of the local market as an Indian corporate citizen, he said. The company would gradually introduce a brand new business model to the local cement plant owners, he added.
The company has been present in India through a cooperation with the building materials major Lafarge, but the presence was minimal, said Wang Wei, chairman, Sinoma International Engineering Co Ltd. With the JV, the company is expecting to be the leading suppliers of cement equipments in India in next five years, said H J Nielsen, MD, LV Technology Public Co Ltd, Bangkok.
The new joint venture would look into establishing engineering, procurement and construction (EPC) capabilities, which is not prevalent in the Indian cement equipment industry, said V C Rao, managing director, LNVT. He said that the company is also looking at enhancing its manufacturing capacity.
“Sinoma is the only company in the world to do this kind of EPC in the segment. That model is not available in India now, which would be brought in through LNVT,” he said.
LNVT is projecting $5 million investment in in next two years and another $5 million investment based on the order intakes of the company, he added. However, a detailed plan on the future would be ready after the board meeting with the new partner.
The company, which has a revenue of around Rs 160 crore, has a backlog of Rs 120 crore, is also working on a project in Nepal for around $55 million at present.
Globally, 80% of the cement equipment market is owned by four companies including Sinoma International, FLSmidth based in Denmark, Polysius AG and KHD based in Germany, according to the company officials.
