Coal news and updates

JSW Cement, part of $11-billion JSW Group, has made a move to acquire a majority stake in Odisha-based Shiva Cement.

 

JSW Cement is buying out 35.62 per cent promoter's stake, triggering an open offer to acquire another 32 per cent of the equity capital of the company.

 

The promoters will offload the 35.62 per cent stake for a total consideration of Rs 97.23 crore.

 

The open offer, which JSW Cement has made along with Sun Investments Pvt Ltd and Reynold Traders Pvt Ltd, will be for Rs 87.36 crore.

 

"The share purchase agreement has been executed with JSW Cement for the sale of shares held by the promoters of the company," Shiva Cement said in a filing with the Bombay Stock Exchange.

 

The Shiva Cement scrip closed at Rs 13.52, up 3.36 per cent on the BSE.

 

As of September 2016, the promoters of Shiva Cement held 37.15 per cent in the company, while public shareholding was 62.85 per cent. Cement major ACC Ltd holds around 13 per cent stake in the non-promoter category.

 

Shiva Cement runs an integrated plant near Rourkela in Odisha, producing around 2 lakh tonnes per annum. It sells cement under the Sumangal brand and caters primarily to the eastern states.

 

The company planned to expand the capacity to 1 million tonnes per annum and has been scouting for strategic investors for some time.

 

Several cement companies were eyeing the production assets of Shiva Cement, which along with its captive limestone reserves in the vicinity, can cater to the eastern markets of Bengal, Jharkhand and Bihar.

 

JSW Cement is looking to strengthen its presence in the east. It is setting up a 2.4-million-tonne unit at Salboni in Bengal at an investment of around Rs 800 crore. The company will benefit from sourcing clinker from the Odisha unit.

 

The cement sector has seen a number of assets changing hands in the recent past. In July last year, Lafarge Holcim sold its Indian assets to Nirma Ltd for about $1.4 billion. Ultratech Cement, part of the Aditya Birla group, bought Jaiprakash Associates's 17.2-million-tonne cement capacity for an enterprise value of Rs 16,189 crore.

 

The sector, however, is expected to see a weak second half following demonetisation and rising pet coke prices.

 

According to Kotak Institutional Equities, a drop in realisations along with an unfavourable volume base and rising pet-coke prices threaten to make the fourth quarter of 2016-17 among the weakest in recent times.