As part of its strategy to become a pan-India player and to cash in on the expected strong revival in cement demand, south India’s leading cement player India Cements has announced that it will be acquiring Springway Mining, a company involved in mining and quarrying business, for `182.89 crore.
In a communication to the stock exchanges, India Cements said it has entered into a share purchase agreement for acquiring the entire shareholding of Springway Mining in a phased manner with an objective of setting up of a cement plant in Madhya Pradesh. According to sources, Springway Mining has an authorised share capital of `30 crore and its paid up capital is around `20 crore.
The company’s decision to acquire Springway stems from the fact that it wants to enter the Uttar Pradesh market, considered to be a major cement market. Though the company has been partly serving the northern belt of the country through its 1.5 million tonne Banswara plant in Rajasthan, the present acquisition will enable it to not only set up a new clinker plant in Madhya Pradesh to serve the UP market, but also enter into other parts of the northern belt, sources said.
When contacted, company official said on the lines of our entry into Rajasthan a few years through acquisition, we will
be acquiring Springway to set up a clinker plant with an initial capacity of 1.5 million tonne.
The acquisition is also part of company’s strategy to have enough limestone, a raw material critical for its future expansion. The company currently has close to 16 million tonne capacity across plants. Though the official refused to share details on the investments in the proposed 1.5 million tonne clinker plant, which is expected to come up at east Nimar district of Madhya Pradesh, sources in the know put the figure at a minimum of `300 crore.
At a recent press meeting in Chennai, N Srinivasan, vice-chairman and managing director of India Cements, said after many years plants are running at higher capacity due to a revival in cement demand. The company hopes to achieve a near-total capacity utilisation in due course and needs to expand its capacity further. He also said the demand will further go up given huge infra spend by both the central and state governments.