Dalmia Bharat, Shree in
race to buy Binani Cement unit
“
As mentioned during our call, these are speculations and as a company we would not like to respond to the speculations,” Dalmia Bharat said in
an email to a query on the matter.
Dhirendra Tripathi
Dalmia Bharat
and Shree Cement are among at least three companies that have
expressed interest in buying Binani Industries
’ subsidiary Binani Cement's 6.25 million tonne per annum cement
manufacturing capacity in India.
The company’s India cement plants are located at two districts of
Rajasthan – Sikar and Sirohi.
“Dalmia Bharat and Shree Cement are interested. There’s one MNC as well
that has a large presence in India which is interested in buying,” an
official familiar with the development said.
Binani has cement manufacturing operations in Dubai and China as well
and according to its website, also sells building material in Tanzania,
the UK, Sudan, Namibia and South Africa.
“As mentioned during our call, these is speculation and as a company we
would not like to respond to speculations,” Dalmia Bharat said in an
email to a query on the matter.
The other two companies -- Binani Industries and Shree Cement -- didn't
respond to mails sent to them.
Binani Cement ended 2015-16 (April-March) with a net loss of Rs 288.9
crore. This followed the 2014-15 net loss of Rs 104.88 crore. It had a
net cash ouflow of Rs 62.11 crore in 2015-16. The Braj Binani group
company had loans of Rs 3,072.83 crore at the end of March 2016. Sale of
cement operations could mitigate Binani Industries’ troubles in
servicing its loans.
"Going by the replacement cost for setting up a million-tonne capacity, a
deal for 6 million tonnes should happen between Rs 4000 crore and Rs
5000 crore, assuming all raw materials and linkages are in place," an
analyst with a domestic brokerage said.
UltraTech Cement, the largest cement manufacturer in India, recently
announced its plans to set up a 3.5 million tonne integrated plant in
Madhya Pradesh.
The company pegged the cost of setting up the plant at
around USD 110 for every tonne of cement. At that rate, the deal size
for Binani should be around Rs 4500 crore.
According to the independent auditor’s observations in Binani
Industries’ 2015-16 annual report, the parent company’s consolidated
current liabilities exceeded its consolidated current assets by Rs
1,360.1 crore while consolidated liabilities exceeded its total
consolidated assets by Rs 1,353.3 crore.
“These factors raise doubts about the group’s ability to continue as a
going concern in the foreseeable future,” the auditor said in the
report.
Binani Cement also has cases related to sales tax and unfair trade
pending in courts.
Consolidation in the around 300-million tonne-a-year Indian cement
market, where supply exceeds demand, is inevitable.
Dalmia Bharat has an annual cement manufacturing capacity of 25 million
tonnes while Shree Cement boasts of a 25.6 million-tonne capacity.
Both Dalmia Bharat and Shree Cement have used the inorganic route in the
past to grow their capacities – Dalmia buying OCL India and Shree
buying a grinding unit of Jaiprakash Associates.
No comments:
Post a Comment