You are here: Home » Companies » News
Business Standard

Lafarge India begins Rs 10,000-cr sell-off

Bids likely from JSW Cement, Piramal Enterprises, CRH, Blackstone and KKR

Topics
Lafarge India

Abhineet Kumar  |  Mumbai 

Lafarge India begins Rs 10,000-cr sell-off

Lafarge India begins its sale process this week after receiving approval from the Competition Commission of India.

The French cement giant has appointed Arpwood Capital and Citi as investment bankers to sell the entire India operations, which has an annual production capacity of 11 million tonnes (mt).

"Bankers will start to reach the potential buyers this week, following which bids are expected to start coming from the next week," said a source. The business put on the block has generated wide interest from domestic and foreign entities. Among these are Piramal Enterprises, JSW Cement and CRH. So are global private equity investors KKR and Blackstone, say investment banking sources. "The deal is estimated to be valued around Rs 10,000 crore," said an investment banker.

This is the second attempt by the company to meet local anti-trust regulations, after its plan to sell its 5.15-mt cement capacity in Chhattisgarh and Jharkhand to Birla Corporation for Rs 5,000 crore ran into trouble. A sudden change in mining laws prohibited transfer of mining rights in case of an asset sale. This compelled the firm to sell its entire business which allows transfer of mining rights. Lafarge and Swiss cement giant Holcim announced a global merger in April 2014, to create the world's largest firm in the segment. This raised eyebrows of anti-trust watchdogs in several countries.

In this country, Holcim, through its control of Ambuja Cement and ACC, has 60 mt capacity. Lafarge has 11 mt in India, of which 7.8 mt (70 per cent) is in Chhattisgarh, Jharkhand and West Bengal. Holcim's ACC and Ambuja have capacities of 6.1 mt and 4.6 mt, respectively, in the eastern region. A simple merger would have led to a capacity of 18.5 mt in the eastern states for Holcim-Lafarge, which would have been a little more than 40 per cent of the estimated 46 mt of total capacity in the region.

This led to CCI scrutiny.

In August 2015, Birla Corp had agreed to buy the proposed assets, along with brands Concreto and PSC, and mineral rights over adequate reserves of limestone. After Lafarge India's inability to consummate the deal along with mining rights, Birla Corp said, "The company has since discussed the matter with its legal advisors and has decided not to accept their contention and is in the process of taking appropriate legal measures, in consultation with lawyers."

Following this, Birla Corp also acquired the five mt capacity Reliance Cement for Rs 4,800 crore, in February. "No major hurdle is expected from Birla Corp for the sell-off," informed the investment banker.


OFFLOADING INDIA BUSINESS
  • French giant has appointed Arpwood Capital and Citi as investment bankers, to sell the entire India operations
  • Lafarge entered India in 1999 with the acquisition of Tata Steel's cement unit
  • Purchased Raymond Cement facility in 2001
  • Firm has a total capacity of 11 mt per annum
  • Has plants in Chhattisgarh, Jharkhand, Rajasthan, Haryana and West Bengal
  • This is the second attempt after its plan to sell 5.15-mt cement capacity in Chhattisgarh and Jharkhand ran into trouble

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Mon, March 21 2016. 00:50 IST
RECOMMENDED FOR YOU
.