JK Lakshmi, Chettinad in race to acquire Deccan Cements amid Andhra infrastructure push: Report

The deal could value Deccan at $360 million.

Delhi-based JK Lakshmi Cement and Chennai-headquartered Chettinad Cement are in the fray to acquire Telangana-based Deccan Cements, people aware of the ongoing talks told Economic Times.

The acquisition interest comes as Andhra Pradesh’s state-driven infrastructure boom fuels demand for regional suppliers of the freight-intensive building material, Economic Times reported.

Deccan Cements, which is expected to achieve an operational capacity of 4 million tonnes by the end of 2025, is seeking an enterprise value of $360 million (Rs 3,110 crore), people familiar with the discussions told Economic Times.

This translates to roughly $90 per tonne of capacity, a figure below the $100 per tonne cost often associated with greenfield expansions in the cement sector, the report added.

Replacement valuations in India’s regionally fragmented cement industry vary significantly, with southern India typically seeing lower capacity utilisation and naked cement realisation (NCR), leading to more modest pricing, Economic Times noted.

Deccan Cements’ integrated plants are located on the outskirts of Vijayawada, Andhra Pradesh’s second-largest city, while its corporate headquarters remain in Hyderabad. The company is currently led by Parvathi Penmetcha.

Deccan has engaged EY for the potential sale process, sources told Economic Times.

The interest in Deccan Cements comes at a time when Andhra Pradesh’s new capital city Amaravati is witnessing a surge in construction activity. According to Economic Times, the Centre has announced Rs 50,000 crore worth of projects to boost infrastructure in the capital region, significantly raising demand for cement.

For JK Lakshmi Cement, which currently has no manufacturing presence in Andhra Pradesh or Telangana, the acquisition could provide an immediate foothold in the region. Chettinad Cement, on the other hand, already operates plants in both states and could use the deal to consolidate its regional dominance, the report said.