Chennai-headquartered India Cements on Monday said it has divested its entire stake in wholly-owned subsidiary Springway Mining Private Ltd (SMPL) to JSW Cement, a subsidiary of industrialist Sajjan Jindal-controlled JSW Group, for `476.87 crore.

Of the total consideration, India Cements has already received `373.87 crore, while the remaining `103 crore will be released on or before December 31, 2022, following completion of certain conditions.

Following the diversification, SMPL will cease to be a wholly-owned subsidiary of the company, India Cements said in a stock exchange update.

SMPL owns limestone-bearing land in Pawai Tehsil of Panna district and is in the process of setting up a cement plant in Gaisabad Tehsil of Damoh district in Madhya Pradesh. 

The company had a net worth of `14.23 crore for the financial year 2021-2022.

However, India Cements did not provide the details on how the company would be using the proceeds from the sale. 

India Cements, which has a gross debt of about `2,900 crore, had earlier said it intends to reduce debt by `550 crore this year.

Earlier reports had stated that India Cements was in talks with several players, including UltraTech Cement and Adani Group, to sell its project in Madhya Pradesh.

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JSW Cement has a current production capacity of 17 million tonne per annum (MTPA) — across its manufacturing units in Karnataka, Andhra Pradesh, West Bengal, Odisha and Maharashtra – had plans to increase it to 25 MTPA by FY25. 

The company produces cement, concrete and construction chemicals.

The Indian cement industry is set to witness the next wave of consolidation, with companies expanding manufacturing capabilities and scouting for acquisitions, riding on favourable policy tailwinds.

As per industry estimates, the cement capacity in the country is expected to rise to 150-160 MTPA over the next five years. There are more than 25 MTPA stressed assets available in the country, which would be targets for the larger players’ acquisition plans.

To start with, Adani Group — which acquired Switzerland-based Holcim Group’s Indian assets earlier — plans to double its cement manufacturing capacity in the next five years and emerge as the “most profitable” cement manufacturer in the country.

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Similarly, UltraTech Cement is adding another 22.6 MTPA of capacity through a mix of brownfield and greenfield expansion plans. The Aditya Birla Group firm, the country’s largest with a current production capacity of 120 MTPA, had earlier approved a capital infusion of `12,886 crore for the capacity additions.

Shree Cement, which has a production capacity of 47.4 MTPA (including overseas), intends to add another 80 MTPA by 2030. Dalmia Bharat is planning to expand cement capacity to more than 48 MTPA by the end of FY24 from the current 35.9 MTPA via both organic and inorganic modes.

India is the second-largest cement producer in the world, accounting for about 8% of global cement production with an estimated production capacity of 550 MTPA.