Part of the Chettinad Group, Anjani Portland Cement,is acquiring a majority stake in Bhavya Cements, which has around 1.4 million tonnes a year of cement-making capacity and annual revenue of more than 300 crore.
Hyderabad-headquartered Anjani Portland said it would pay a provisional price of 51.53 a share for the stake in unlisted Bhavya Cements. It did not disclose the number of shares being acquired or the total deal value.
The acquisition marks another round of consolidation in the South Indian cement market, which is considered the most fragmented in the country with substantial surplus capacities. The key players in the market include UltraTech, Ramco, Chettinad and India Cements.
Some of the significant mergers and acquisitions in the South Indian cement market in recent years include Anjani Portland (1.2 million tonnes) by Chettinad, Shree Jayajothi (3.2 MT) by My Home, BMM (1 MT) by Sagar Cements and JP Associates (5 MT) by UltraTech.
In a communique to stock exchanges on Wednesday, Anjani Portland said the object of the acquisition was “to improve the market presence of the company with addition of a new brand”.
It said the acquisition would substantially increase the cement manufacturing capacity under the control of the company.
Informing the bourses that “the acquisition does not fall within related-party transactions” and that the promoter or promoter group have no interest in Bhavya Cements, Anjani Portland’s company secretary Subhanarayan Muduli said the acquisition was expected to be completed within 15 days from the date of signing the agreement.
Established in 2007, Bhavya Cements is into the manufacturing of ordinary Portland cement, Portland cement for the manufacture of railway sleepers, Portland Pozzolana cement, sulphate resisting Portland cement and Portland blast furnace slag cement for use in coastal areas. The company reported revenue of 304 crore in fiscal 2020.
Chettinad Cement had acquired a 75% stake in Anjani Portland in March 2014, from its erstwhile promoters and through an open offer to the public.
Shares of Anjani Portland ended 5.35% higher at 321.15 on the BSE Wednesday, outperforming the benchmark Sensex that gained 0.75%.