JSW Cement will make a bid on Monday in partnership with a global private equity (PE) player for debt-laden Binani Cement.
The bid deadline for Binani is Monday.
JSW Cement managing director Parth Jindal said the PE entity would have a majority in the proposed entity. He declined to divulge the name. He also said the bidding for Binani was expected to be aggressive, as at least 11 companies were likely to put bids. Lenders had extended the bid deadline in the wake of interest from suitors.
Binani has annual capacity of 11.25 million tonnes, of which six mt is in India. It has a grinding unit in Dubai and a plant in China.
JSW has a limestone deposit in Fujairah in the UAE and a clinker unit. Jindal said if JSW bagged Binani, the Fujairah unit could be integrated with Binani’s Dubai one.
Binani has secured and unsecured debt of Rs 45 billion. Its liquidation value is Rs 23 billion.
Jindal said the company didn’t have a war chest for stressed asset acquisitions. However, for an asset like Binani, it would use the might of the group. JSW has also put in a bid for Kalyanpur Cements, which has annual capacity of a million tonnes. It has the only limestone deposit in Bihar.
JSW Cement’s current capacity is 11.6 mt. By 2020, it is eyeing 20 mt, through the organic route.
If the bid for Binani is successful, it will not be consolidated into JSW Cement’s books immediately. The preferred model the JSW group has adopted for most stressed assets is to partner with PE entities.
“We realise it will take two-three years to turn around these companies,” Jindal explained. “So, for two-three years, it will remain a separate entity.” Once JSW Cement goes for an initial public offering, likely in 2020, it will be merged.
For Kalyanpur, however, JSW Cement has gone alone. Jindal said the balance sheets of the companies were strong and it had the ability to raise capital.
In the case of Monnet Ispat & Energy, JSW Steel has partnered with AION Capital. The JSW-AION combine was the sole bidder for the asset. Jindal said as part of the resolution proposal for Monnet, it was proposed that JSW-AION would have 82 per cent, 10 per cent would be with the lenders and eight per cent with existing promoter Sandeep Jajodia. However, the lenders did not want Jajodia to hold any stake. Monnet has got an extension of 90 days, ending on April 13. The deliberations would be around that.
JSW-AION had given a bid of Rs 24.7 billion and a plan entailing equity infusion of Rs 10 billion.