As part of its strategy to become one of the major players with a pan India presence, India Cements Ltd, through its investment and financial services subsidiary ICL Financial Services Ltd (ICLFSL), has acquired the entire promoter holding of 53% in Indo Zinc Ltd, formerly a listed entity with operations in Rajasthan and an office in Mumbai, for an undisclosed sum.

Interestingly, Indo Zinc, a manufacturer of zinc metal sheets, had diversified into the cement business by acquiring a 30-year mining lease in Rajasthan. It could not, however, proceed further owing to financial difficulties and other problems, sources in the know told FE here on Monday.

ICLFSL has acquired Indo Zinc in two separate transactions–a 13% stake on July 12 and another 39.84% on July 19–for an undisclosed sum through a negotiated deal. Following this, ICLFSL will be making an open offer soon for acquiring the remaining stake in the company, primarily being held by the public, the sources added.

When contacted, a senior ICL official said the primary reason for acquiring Indo Zinc was the mining lease, which it acquired for 30 years a few years back.

Indo Zinc was originally incorporated as Indo Zinc Pvt Ltd in March 1987. Subsequently, it was converted into a public limited company with effect from January 20, 1992. Its main business is manufacturing of secondary zinc. Indo Zinc currently operates a manufacturing plant with a capacity of 3,600 tonne per annum at Pithampur in Madhya Pradesh.

According to the official, the company decided to diversify its activity and enter into cement business. It planned to expend Rs 150 crore and set up a 500,000 tpa cement plant in Rajasthan. However, financial constraints and dismal scenario in its main business have brought work on this project to a standstill. ?As part of our expansion plans, we found a right partner in Indo Zinc and acquired the entire promoters? holding. We would soon start work on this project and hope to make an investment of Rs 600-650 crore to build 1.5 million tonne per annum capacity, which may be scaled up later,? he said. However, the official has ruled out any time frame for setting up the new plant.

Earlier at a recent press conference, India Cements vice-chairman and managing director N Srinivasan had said that the company would be investing close to Rs 1,500 crore over a period of time to expand its capacity from 14m tonne to 18m tonne.