Dalmia Cement (Bharat), a subsidiary of Dalmia Bharat Enterprises Ltd (DBEL), is raising its holding in Kolkata-based for Rs 77.19 crore ($14 million), as per a BSE disclosure.
The firm already owns 50 per cent stake in Calcom Cement which it had acquired in January this year and is buying 26 per cent more, valuing the firm at Rs 296 crore. The previous deal valued Calcom at as much as Rs 576 crore.
Calcom is a manufacturer of OPC and PPC cement and is currently expanding its consolidated cement manufacturing capacity to 2.1 million tonnes per annum. The latest deal for acquiring additional stake in Calcom Cement stake would also involve payment in multiple tranches, like the previous deal.
The company was started by its chairman Binod Kumar Bawri who had been involved with businesses in north-east India. Assam state government’s industrial development unit has around 10 per cent stake in Calcom Cement, which is also backed by Dutch and German development financial institutions.
The firm sells its product under the brand Calcom Cement. While the bulk of its sales are targeted at the north eastern regional market where the demand is pegged at over five million tonnes a year (around half of which is catered by cement plants in other regions), the firm has plans to expand to other parts of the country and also to export to Bangladesh.
Dalmia Bharat has been eyeing cement firms in southern and eastern regions of the country, which have recently set up or are setting up capacities, but facing issues in running operations, given subdued demand and high costs of production. The deal appears to be a consolidation play for the PE-backed firm.
DBEL is the demerged cement and power business of Dalmia Bharat Sugar & Industries (formerly Dalmia Cement Bharat). The cement subsidiary is backed by buyout giant KKR, which invested Rs 750 crore for an undisclosed stake two years ago, in the largest private equity deal in the cement industry in India. The fund raised was to be used for both organic/inorganic growth and de-leveraging.
Around six years ago, Dalmia Cement Bharat had raised around Rs 115-120 crore from Actis. Actis continues to hold on to these shares and post-demerger, held around 5.6 per cent in both Dalmia Bharat Sugar & Industries and DBEL.
(Edited by Prem Udayabhanu)