Ajay Piramal-controlled Piramal Enterprises Ltd has provided funds worth Rs 256.6 crore ($38.57 million) to cement manufacturer Sanghi Industries Ltd to help the company term out its capital structure and repay its lenders.

The funding was done through Piramal's Structured Investment Group by subscribing to non-convertible debentures of the cement company, Piramal said in a statement.

"The investment endorses the quality of the assets of the company which makes it the price and cost leader in the growing western market," the statement said.

Sanghi Industries operates a cement plant with an installed capacity of 4.1 million tonnes (MT) per annum in Kutch district, Gujarat, constituting about 16% of the state’s production. The company plans to add another 4 MT to its existing plant at Kutch.

“This debenture funding has opened up many new opportunities for the company. In coming months, cement demand will be fuelled by the substantial infrastructure spending in rural regions. We look forward to a new phase of growth,” said Ravi Sanghi, chairman and managing director, Sanghi Industries.

Motilal Oswal Investment Banking acted as the solution provider and the arranger for the funding.

India's cement industry saw a major deal last month with UltraTech Cement Ltd saying it will buy nearly two-thirds of Jaiprakash Associates Ltd’s cement business under a revised deal valued at Rs 15,900 crore (about $2.4 billion), including debt. 

India had a total cement capacity of 415 MT with utilisation of around 70% at the end of FY15-16.

The Structured Investment Group, which is part of Piramal's fund and asset management arm Piramal Capital, provides long-term mezzanine capital to corporates in sectors such as infrastructure, manufacturing, consumer services and education. Piramal Capital manages assets worth around Rs 22,000 crore.

The Piramal Group—which was founded in 1984 and has operations in 30 countries and brand presence in over 100—has diversified into areas such as finance, private equity and real estate funding from its core pharmaceuticals business over the past years.

Shares of Piramal Enterprises closed at Rs 1,079.05 apiece, up 1.53% while shares of Sanghi Industries ended at Rs 67.20 apiece, down 2.75% in a strong Mumbai market on Thursday.

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