Aditya Birla Group-owned UltraTech Cement Ltd has reportedly emerged as the lead contender to purchase the cement business of India’s largest Kolkata-based FMCG group Emami in an all-cash deal worth Rs. 6,500-7,000 crores. The media report says that Ambuja Cements is the only other contender which has entered into the final biding in the sale of Emami cement.
‘Ambuja’s offer is less than that of Aditya Birla Group-owned UltraTech. UltraTech is most likely to win the bid, especially considering their keenness to expand in the east and the offer price made. The final binding bid round is likely to end next week,’ reports livemint after getting insight from the officials close to the deal.
Emami has hired Credit Suisse as the investment banker and Arpwood Capital as the deal adviser to finalise all-cash deal.
Mumbai based UltraTech is India’s largest producer of the building material and has major expansions in that area. With the deal in hand, UltraTech plans to enter into the eastern part of the nation where Emami leads the market with the largest number of cement manufacturing units.
In its expedition to lead the domestic cement market of India, UltraTech Cement acquired 21.2mtpa cement capacity from Jaiprakash Associates in June 2017. With a bankruptcy resolution process, the cement major acquired Rajasthan-based Binani Cement in a deal of Rs. 7,950 crores in November 2018. UltraTech recently completed the acquisition of Century Textile’s cement business with the scheme of demerger becoming effective from 1 October.
UltraTech aims stronger presence in tier II and tier III locations which fall in the eastern zone.
As a leading cement manufacturing company of Eastern India, Emami established an installed manufacturing capacity of 5.60 million metric tonnes per annum (“MMTPA”) in just first two years of commercial operations. Today, it has around 8 million tonnes per annum (MPTA) capacity across three operational cement plants in eastern and central India, while UltraTech can produce over 117 million tonnes annually. UltraTech Cement owns 23 integrated plants, a clinker plant, 27 grinding units and seven bulk terminals. Outside the country, UltraTech business operation expands into the UAE, Bahrain, Bangladesh and Sri Lanka.
The financial distress erupted out of a heavy debt of Rs. 2,246.76 crore as on March 31, 2018, which includes both – Rs. 2,093.86 crore as secured term loan from banks and financial institutions and Rs. 152.90 crore working capital borrowings from banks – has made Fast Moving Consumers Goods Emami Group sell out the cement business unit to repay the group’s debts.