Coal news and updates

Piramal Enterprises has invested ₹256 crore in Sanghi Industries, a Kutch-based cement company with production capacity of 4.1 million tonnes a year(mtpa).

The investment made through non-convertible debentures would enable Sanghi to repay some of its debts ahead of schedule and save on interest outgo.

Earlier, Ajay Piramal has shown interest in bidding for the 11 mtpa cement asset put on the block by Lafarge. Ever since Piramal sold his flagship pharma business for a whopping $3.8 billion some six years ago, he has been scouting for investment opportunities and now seems bullish on the cement sector on the back of the government’s enhanced spending in infrastructure.

Capacity addition

 

Sanghi Industries’ production capacity accounts for about 16 per cent of Gujarat’s production capacity. It also plans to add another four mtpa on the surplus land at its existing plant. The capacity addition would be made at a competitive cost of less than $50 a tonne, said Sanghi Industries in a statement on Thursday.

The company has huge high-quality limestone reserves, captive power and port facilities. The country has total cement capacity of 415 million tonnes and utilisation level was at 70 per cent due to weak demand.

Going forward, the company expects economic recovery coupled with barriers on setting up new cement plants to result in higher capacity utilisation.

Jayesh Desai, co-Head, Structured Investment Group, Piramal Enterprises, said cement demand in India is expected to increase with government spending on large infrastructure projects and higher allocation towards improving rural income.

Opens up new avenues

 

Ravi Sanghi, Chairman, Sanghi Industries, said the funding through debentures has opened up new opportunities and comes when demand for cement is showing signs of revival.

Piramal Fund Management, a division of Piramal Enterprises, has $2.7 billion of assets under management, while the structured investment group provides long-term ‘patient’ mezzanine funding to capital-intensive businesses.

Source: The Hindu business Line