The $11-bn JSW Group’s cement arm JSW Cement is on the prowl for domestic assets as it looks to ramp up its production capacity and gain access to new domestic markets. ET NOW learns from multiple sources familiar with ongoing negotiations that the Parth Jindal-led company has initiated talks for a potential buyout of Odisha-based Shiva CementBSE 1.04 % in which ACC Ltd holds a 12.65% stake. ET NOW was the first to report the development.
“In principle, discussions have recently begun between both parties and JSW Cement is evaluating a 100% acquisition of Shiva Cement. Due diligence on the proposed transaction is likely to begin in a few weeks. Future progress on the deal will depend on the outcome of the due diligence process along with the finalized valuations ,” said one of the sources cited above. ET NOW could not independently verify if there is any other suitor in the race.
According to reports, JSW Cement has embarked on an expansion plan to reach a capacity of 17 mtpa ( million tons per annum) by 2018 from the current 8.76 mtpa. JSW Cement has three facilities at Vijayangar, Karnataka, Nandyal in Andhra Pradesh and Dolvi in Maharashtra and utilizes slag from the JSW steel plant to produce green cement.
Shiva Cement’s Odisha plant is spread over 70 acres and is adjacent to the state highway connecting Rourkela & Sambalpur. The present capacity of the plant is 0.132 mtpa, but the company has entered into a MoU with the state government to expand the capacity up to 2.6mtpa in two phases. Currently, the company is implementing phase 1 expansion from 0.132 mtpa to 1mtpa.
” The talks are at an early stage but based on the progress of the deal talks and if the valuations are suitable, then ACC may explore the option of exiting Shiva Cement and selling its stake,” sources added. ACC had picked up stake in Shiva Cement back in 2007.
In response to an email query from ET NOW, Shiva Cement declined to comment on market speculation and queries sent to JSW Cement & ACC Cement were unanswered at the time of going to press.
