Binani Industries Ltd, the public-listed holding arm for the diversified business of Braj Binani group, has approved in principle to divest up to 40 per cent stake in Binani Cement Ltd in phases. The firm, however, has not disclosed if it has identified an investor or strategic partner for the transaction for the mid-sized cement arm.
As of March 31, 2012, Binani Industries held 96.3 per cent stake in Binani Cement, which generated revenues of around Rs 2,028 crore or around two-thirds of the consolidated revenues of Binani Industries. The cement business clocked net profit of Rs 48 crore even as the parent firm was in losses in FY12, which shows how critical the cement unit is to the listed firm.
Binani Industries also houses other businesses such as zinc, industrial composites and glass fibre.
The parent firm has a market cap of Rs 407 crore and with a stake sale in line, it is looking to monetise its holdings in its key profit-making business.
“A committee of the directors has been formed to approve other terms including investor rights, funding schedule and the price at which it will be divested to the investors,” it said in a disclosure after a board meeting earlier this week.
At present, Binani Cement has a running capacity of 6.5 million tonne in the country and the disinvestment will help in the process of building its international business.
Vinod Juneja, managing director of Binani Cement, has told CNBC it is looking to expand in China by putting another clinkerisation unit and wants to set up another plant in Dubai.
In other deals in the cement sector, Jaiprakash Associates’ cement units in Gujarat are on the block with UltraTech believed to be among those negotiating for a deal. Also, recent reports suggest Lafarge is looking to divest stake in Indian arm to a private equity firm to raise cash for local expansion.
(Edited by Sanghamitra Mandal)