The M.P. Birla Group on Monday said it was acquiring the cement business of Lafarge India for Rs.5,000 crore through a combination of internal accruals and fresh debt to add another 5.5 million tonnes in annual capacity.
Under this transaction, Birla Corp and its subsidiaries will acquire the integrated cement unit of Lafarge India at Sonadih (Chhattisgarh), a cement grinding unit at Jojobera (Jharkhand), along with Concreto and PSC brands and an excellent management team.
These units have a cement capacity of 5.15 million tonnes per annum (mtpa), with mineral rights over adequate reserves of limestone. Upon completion of this transaction, Birla Corp will consolidate its position in the Eastern India cement market where the demand-supply scenario and outlook continue to remain buoyant.
The France-based Lafarge, which itself entered India in 1999 by acquiring the cement business of Tata Steel, also has units in Rajasthan, Haryana and West Bengal. Its total cement production capacity in the Indian market is currently around 11 million tonnes.
"The Acquisition Business, together with the Concreto and PSC brands, perfectly fit into our strategic vision and ambition of enhancing our competitiveness in our chosen markets. I am glad to welcome new talent and leaders to our Group, who share our convictions and professional culture," chairman of Birla Corporation Harsh V. Lodha said in a statement.
Originally founded as a jute company in 1919, Birla Corporation quickly enhanced its cement portfolio which now contributes over 90 percent to the company's revenues.
With a total operational cement capacity of 10 mtpa, it has units in Rajasthan, Madhya Pradesh, Uttar Pradesh and West Bengal. The completion of the deal will enable the company to enhance its capacity to 15 mtpa.
The deal is subject to approval from the Competition Commission of India and other regulatory bodies.