Birla Corp Pips Global Giants To Scoop Up Lafarge India's Eastern Assets For Rs 5000 Crore

MUMBAI: Beating several global giants and bulge bracket private equity suitors, Birla announced that it has agreed to acquire two cement units of Lafarge India that the French major is being forced to sell to conclude its mega global merger with Holcim Ltd. These two assets in eastern India -- Jojobera in Jharkhand and Sonadih in Chattisgargh - are being sold through a slump sale for an enterprise value of Rs 5000 crore.

The transaction would be funded through existing cash reserves and incremental debt, and is subject to approval of Competition Commission of India and other relevant regulatory approvals.

Under this transaction, Birla Corp will acquire an integrated cement unit at Sonadih, a cement grinding unit at Jojobera in Jharkhand, along with Concreto and PSC brands along with the management team. The plants have a total cement capacity of 5.15 million tonnes per annum (mtpa), with mineral rights over adequate reserves of limestone.

"The acquisition business has a demonstrated track record of operational and commercial excellence with profitability amongst the highest in the industry aided by raw material linkages, strong distribution networks and excellent brand loyalty in the attractive Eastern India cement market," the company said in a statement. Upon completion of this transaction, Birla Corp will consolidate its position in the east where demand supply scenario and outlook continue to remain buoyant.

Birla Corp, established in 1919, is part of the MP Birla Group with presence across cement and jute; cement constitutes over 90 per cent of the company's revenues with a total operational cement capacity of -10 mtpa, it has units in Rajasthan, Madhya Pradesh, Uttar Pradesh and West Bengal. Post completion of this transaction, Birla Corp will have a total capacity of -15 mtpa. With addition of these brands to its existing basket of brands, Birla Corp will derive synergy benefits through consolidation of its capacity.

"I am very pleased to announce this very important transaction in Birla Carp's history. The business together with the Concreto and PSC brands, perfectly fit into our strategic vision and ambition of enhancing our competitiveness in our chosen markets. I am glad to welcome new talent and leaders to our Group, who share our convictions and professional culture," said Harsh Lodha, Chairman of Birla Corp.

KRISCORE Financial Advisors and SBI Capital Markets Limited were financial advisors and Nishith Desai Associates acted as counsel to Birla Corp for this transaction. Boutique investment bank advised Lafarge.

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