Shree Cement Ltd is scouting for acquisition opportunities in central and southern India and the company may add up to 10 million ton per annum (MTPA) of capacity through the inorganic route, Managing Director HM Bangur told Moneycontrol.
After billionaire Gautam Adani announced his $10.6- billion acquisition of India’s second-biggest cement business from Holcim Group of Switzerland in May, UltraTech Cement announced a mega investment plan to scale up capacity and signaled that it will aggressively protect its market leadership. Experts believe that the entry of an aggressive new player will push other players to expand and protect their market share.
The company is now “aggressively” looking for acquisition opportunities in central India and is also open to acquiring assets in the south, Bangur said.
“We have a cash pile of more than Rs 5,000 crore and can take on board a capacity of around 10 million tonnes with some debt on books. We would prefer the central region more than southern India,” Bangur said.
He declined to name potential acquisition candidates, citing that the process is still at an early stage. But at the same time higlighted that substantial progress has been made.
In terms of valuation, the managing director highlighted that a benchmark Enterprise Value (EV)/ tonne of $120/ tonne can be looked at for assets in the central region. EV/tonne is how cement companies are conventionally valued. This suggests roughly how much it would take for someone to set up a tonne of cement capacity.
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