Cement, Energy and Environment

operating profit for the year ending March 31, 2010 - by 59 per cent at Rs. 1,578 crore. Courtesy: The Hindu Business Line, Ko/kata, 22.5.2010. ZUARI TO RE-ENTER CEMENT BUSINESS Zuari Industries is re– entering cement business after exiting it four years ago as part of plans to spend over $1.5 billion for expanding fertilizer, real estate and cement businesses, chairman of the diversified firm said. The company had sold its equity stake in the cement business to joint venture partner ltalcementi in 2006. Saroj Poddar, Chairman of Zuari Industries said the Italian cement giant has the right of first refusal to undertake either jointly or wholly the proposed cement unit that's at present housed under Gulbarga Cement. But the rights expire in October and ltalcementi has not shown any interest in the project as yet. "Although the next two years will see lot of capacity up in the sector, over a longer period, cement remains a lucrative business to be in, given the economic growth prospects of the country," said Mr. Poddar who became the Chairman of key group firms after the demise of his father-in-law and industrial KK Birla in August 2008. The initial plan is to set up a three million tonne cement plant at Gulbarga in Karnataka. The project would absorb an investment of Rs. 1,500 crore and is expected to commence from mid -2011. It will be funded through a mix of internal accruals, borrowings and a possible equity issue. "We will not restrict ourselves to this greenfield unit and will consider all means to expand even if it comes down to making acquisitions," said Mr. Poddar. Courtesy: The Economic Times New Delhi, 04.06.2010. Merger & Acquisition GLOBAL GIANTS IN RACE FOR MAHARASHTRA CEMENT UNIT At least four global cement majors, Lafarge, CRH, Heidelberg Cement and It all cementi, are in the race to buy a little-known cement company in Maharashtra, Murli Industries with a total capacity of 2.9 million tonnes. Swiss cement giant Holcim had earlier shown some interest in the asset but has subsequently withdraw from the race, two persons with direct knowledge of the developments said. The non-binding bids have been submitted and due diligence is on. The promoters are expecting close to $200 a tonne. However, the bids so far are in the range of $180 million a tonne. Even at this valuation, the total cash payout for the buyer will be around the $540- 550 million mark. The high value of the company is due to the shortage of cement capacity compared to the demand in Maharashtra. Recently, private equity fund KKR invested Rs. 750 crore in a wholly-owned subsidiary of Dalmia Cement. Paris-based Vicat also bought a 51 per cent stake in unlisted Andhra-based Bharati Cement for close to $ 350 million in April this year for its existing 2.5 million tonne capacity and a planned expansion of another 2.5 milllion tonnes. MEXICO'S CEMEX, the world's third largest cement player, is also believed to be eyeing Hyderabad-based Penna Cement. Being a listed entity, Murli's cement unit will have to be either demerged and then sold, or it could be sold as a going concern as part of a slump sale. For FY 201 0, Murli Industries had posted a net profit of Rs. 40.30 crore on a revenue of Rs. 571.68 crore. The company's share price fell 2.35 per cent to Rs. 95.60 on the Bombay Stock Exchange on 22.06.2010. Motilal Oswal and Macquarie are believed to be the advisors to' the deal. Murli Industries CFO Anand Chandak did not respond to queries on the issue. A Lafarge spokesperson told Business Standard the company did not want to comment on market speculation, while others could not be contacted. Nagpur-headquartered Murli Industries is know primarily for its soya, edible oils, paper and power business, but had diversified into cement recently. The plant was commissioned in Chandrapur, near Nagpur, in March. It includes a 2.1 million tonne clinker facility. The plant, however, is yet to operate at 100 per cent capacity, but is gradually ramping up production. Murli Industries had also planned to set up similar cement units in Karnataka and Rajasthan subsequently. But in recent months, the management took a call to divest its non-crore portfolio, including cement, to unlock value. 12