At least four global cement majors, Lafarge, CRH, Heidelberg Cement and Intalicementi, 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Swiss cement giant Holcim had earlier shown some interest in the asset but has subsequently withdrawn from the race, two persons with direct knowledge of the developments said.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 million 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 2010, 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 today.
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 known primarily for its soya, edible oils, paper and power businesses, 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- core portfolio, including cement, to unlock value.
In India's cement space, the Holcim-ACC combine and the Aditya Birla group, with flagships Ultratech and Grasim, are way ahead with a combined capacity of 97 million tonnes. Then comes Jaiprakash, which has a capacity of 15 million tonnes.
Others, including Shree, Lafarge, Dalmia and Penna, are far behind, with the average capacity ranging between 7 and 11 million tonne.
