Reliance Cementation, part of the Anil Ambani Group has reportedly begun negotiations to acquire Tamil Nadu-based Sree Jayajothi Cements, valued at ca. Rs. 2000 crore.
"The deal may or may not happen depending upon the valuation. I am expecting to sell the business for at least Rs. 2000 crore," T R Kannan, Managing Director of Jayajothi Cements told press,
Reliance Infrastructure’s subsidiary, Reliance Cementation has allegedly commenced negotiations with Jayajothi Group to acquire the 3.2 million tpa capacity cement plant. If the proposed acquisition goes through, Reliance Cementation will be in a position to demonstratively enter the cement industry.
Currently, Jayajothi Cements distrubes to the four southern states of Tamil Nadu, Andhra Pradesh, Karnataka and Kerala. The domestic cement industry is expected to increase capacity by 68 million t by 2013, taking the total to 392.8 million tpa, according to a recent report by rating agency Fitch.
Experts believe that domestic consumption is likely to total 267 million t by then, leading to squeezed profits. However, in the immediate future the demand-supply gap is expected to remain the same in the southern region.
Jayajothi Cements was incorporated as a public limited company in December 2006 with the aim to develop, construct and operate cement-manufacturing plants. For the year ended March 2010, the Jayajothi Group had overall revenue of over Rs. 300 crore recorded.
Chairman Anil Ambani announced the Group's venture into the cement industry back in 2009 and laid out the Group's plan of setting up plants with an aggregate capacity of 20 million tpa, at a cost of nearly Rs. 10 000 crore, over the next five years.
Read the article online at: https://www.worldcement.com/asia-pacific-rim/15042011/cement_company_acquisition_negotiations_in_india/