Lafarge has shortlisted five bidders for the sale of its India assets, which comprise cement plants with a total capacity of 11 million tonnes per annum. According to sources close to the development, Mexico’s CEMEX, China’s
Anhui Conch Cement, JSW Cement, Piramal Enterprises and the Nirma Group figure in the list of bidders shortlisted by the company. They are expected to make binding offers by the end of July. Of these, CEMEX and Anhui are overseas cement players that do not have a presence in India so far while Piramal and Nirma currently do not have a presence in the cement sector but are keen to enter it.
“The bids so far are non-binding,”said a senior investment banker directly involved in the sale process, adding, “The bids are in the range of $1.2-1.5 billion. However this can change once the binding offers come post the
due diligence process, which ends in July.”
Lafarge India’s plants are located in West Bengal, Jharkhand, Chhattisgarh, Haryana and Rajasthan.
Sources said that the initial round of bids saw participation from a number of financial and strategic players including the Blackstone Group and Irish cement maker CRH Group.
Industry sources said that CEMEX, globally the third largest cement manufacturer, is keen enter the country and is therefore looking at this opportunity as an apt one. It was in talks to acquire a cement plant in Nagpur till recently but the deal did not materialise as the plant in question did not have captive limestone reserves.
If the deal is bagged by China’s Conch Cement, it will mark the entry of a Chinese cement firm in the country. The Nirma Group has also been grappling with regulatory issues for its proposed greenfield cement plant in Gujarat. For Piramal Group also the deal would mark its entry into the cement sector.
Last year, Lafarge was directed by the Competition Commission of India (CCI) to divest a part of its cement assets over antitrust concerns following its global merger with Swiss cement giant Holcim in April 2014. The CCI’s concern stemmed from the fact that Lafarge and Holcim together enjoyed a dominant position in several markets in India with total capacity of 68 million tonnes per annum. While Lafarge has a large presence in eastern India, Holcim through its subsidiaries ACC and Ambuja Cement has a presence in almost all key markets in India.
In August 2015, Lafarge received conditional clearance from CCI to sell its Jojobera and Sonadih plants in eastern India to Birla Corporation for an estimated Rs 5,500 crore. However, the deal did not go through due to regulatory issues pertaining to transfer of limestone mining rights, following which Lafarge submitted a revised proposal to sell its entire cement assets here. The plan again hit a roadblock when Competition Appellate Tribunal halted the sale process in April on an appeal by Dalmia Cement. However, Dalmia subsequently withdrew its appeal, thus clearing all roadblocks in the sale process.
Industry experts maintain that the forthcoming sale could see aggressive bidding given the growing interest in the Indian cement industry, which has a current production capacity of 287 mtpa but is growing at a rate of 8% per annum.