According to reports, French cement manufacturer Vicat is in talks to purchase Sagar Cements’ 47% stake in the joint venture company Vicat Sagar Cement Private Limited, based in India, for a sum of around Rs.4100 crore. If confirmed, the deal will be the largest since UltraTech's purchase of Jaypee Cement’s Gujarat unit in September 2013 for Rs.3800 crore.
The company’s production capacity in India currently totals around 7.75 million t. The joint venture with Sagar Cements, located in Gulbarga, Karnataka, started operations in January 2013, with an initial capacity of 2.75 million t. According to the Economic Times, the deal could see Vicat paying around Rs.7400 per tonne of capacity, due to the plant's advanced technology and strong demand from local markets. The buy out would make Vicat the second largest manufacturer in southern India and place the company within the top 10 cement producers in the country.
Vicat’s Indian expansion strategy involves adding some 5.5 million tpa to the Gulbarga plant’s total production capacity. The expansion will take place in two phases, the first in 2016 – 2017 and the second in 2018 – 2019. Each phase will reportedly cost around Rs.1800 crore and will add approximately 2.75 million t to the facility’s total capacity.
Update – Sagar Cements denies sale
Sagar Cements has denied reports that it is planning to sell its 47% share in the joint venture company Vicat Sagar Cement Private Limited. A Sagar Cements representative said in a statement to the stock exchanges that the newspaper reports were speculative in nature and that the company wished to deny the contents related to the sale of its stake in the joint venture.
Edited from various sources by Rosalie Starling
Read the article online at: https://www.worldcement.com/asia-pacific-rim/20032014/vicat_to_buy_out_sagar_cements_stake_in_indian_joint_venture_157/