Shree Cement in talks for stake in Sanghi Cement

02 May 2023 CW Team

Commercial terms that are indicative have been shared. According to the sources, the talks are not exclusive, and other parties may be discussing a deal at the same time.

Commercial terms may differ depending on the results of due diligence. The talks could end up being fruitless. The 6,000 crore EV includes debt of 1,800 crore. This puts the equity value under consideration at 4,200 crore. Shree Cement could pay between 1,680 crore and 3,024 crore for the quantum of equity stake being discussed at this valuation, not including the cost of an open offer.

Rivals such as UltraTech, Dalmia Bharat, and JSW Cement are said to have held informal discussions for a potential acquisition in the past, but no deal was reached.

"JSW Cement has no plans to bid on Sanghi Cement and has no interest in acquiring the asset." "Any claims to the contrary are completely unfounded and false," a JSW spokesperson said.

The deal is being guided by Kotak Special Situations Fund, which invested 550 crore in Sanghi Cement in November.

According to the most recent stock exchange disclosures, Sanghi Cement's promoters own approximately 72% of the company.

According to the disclosures, approximately 98% of their shareholding is encumbered.

"In November, there was a need for funds to cover certain debt repayments." We were approached to gauge our interest in buying a stake. The cement industry had been impacted by global commodity price increases. "Things are more comfortable now," said a major cement producer.

According to Sanghi Cement's most recent financials, the company lost 221 crore on revenue of 720 crore in the first nine months of 2022-23. It is yet to report its fourth-quarter results.

Sanghi Cement has an annual production capacity of 6.1 million metric tonnes. It serves the markets of Gujarat, Rajasthan, Maharashtra, and Madhya Pradesh in western India. It also owns two terminals strategically located near the coast, facilitating raw material transportation. The company owns a captive power plant with a capacity of 143 MW.

"In 2016, when the company had to undergo debt restructuring, promoters were on a similar path." But they were able to hold out even then," said a banker who has been closely following the company.

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According to multiple sources briefed on the matter, Bangur family-owned Shree Cement is in non-binding talks to acquire between 40% and 72% of Sanghi Cement for an enterprise value (EV) of 6,000 crore. Commercial terms that are indicative have been shared. According to the sources, the talks are not exclusive, and other parties may be discussing a deal at the same time. Commercial terms may differ depending on the results of due diligence. The talks could end up being fruitless. The 6,000 crore EV includes debt of 1,800 crore. This puts the equity value under consideration at 4,200 crore. Shree Cement could pay between 1,680 crore and 3,024 crore for the quantum of equity stake being discussed at this valuation, not including the cost of an open offer. Rivals such as UltraTech, Dalmia Bharat, and JSW Cement are said to have held informal discussions for a potential acquisition in the past, but no deal was reached. JSW Cement has no plans to bid on Sanghi Cement and has no interest in acquiring the asset. Any claims to the contrary are completely unfounded and false, a JSW spokesperson said. The deal is being guided by Kotak Special Situations Fund, which invested 550 crore in Sanghi Cement in November. According to the most recent stock exchange disclosures, Sanghi Cement's promoters own approximately 72% of the company. According to the disclosures, approximately 98% of their shareholding is encumbered. In November, there was a need for funds to cover certain debt repayments. We were approached to gauge our interest in buying a stake. The cement industry had been impacted by global commodity price increases. Things are more comfortable now, said a major cement producer. According to Sanghi Cement's most recent financials, the company lost 221 crore on revenue of 720 crore in the first nine months of 2022-23. It is yet to report its fourth-quarter results. Sanghi Cement has an annual production capacity of 6.1 million metric tonnes. It serves the markets of Gujarat, Rajasthan, Maharashtra, and Madhya Pradesh in western India. It also owns two terminals strategically located near the coast, facilitating raw material transportation. The company owns a captive power plant with a capacity of 143 MW. In 2016, when the company had to undergo debt restructuring, promoters were on a similar path. But they were able to hold out even then, said a banker who has been closely following the company. Also Read Oil India and Himachal govt agree to adopt renewable energy sources Sanchi, in Madhya Pradesh is set to become India's first solar city

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