Displaying items by tag: Dalmia Bharat

UltraTech Cement’s deal to buy the cement business of Century Textiles & Industries could see it become the world’s third largest cement producer by production capacity outside of China.

It announced this week that it had entered into an acquisition agreement to buy the cement subsidiary of BK Birla Group for US$1.26bn. If the deal completes then it will gain three integrated plants in Madhya Pradesh, Chhattisgarh and Maharashtra respectively with a combined production capacity of 11.4Mt/yr and a 1Mt/yr grinding plant in West Bengal. At this point UltraTech Cement will increase its production capacity to 106Mt/yr seeing it become the third largest cement producer in the world in Global Cement’s Top 100 Report.

This latest deal is subject to the usual regulatory approval from competition bodies and the like. Bustling past this step seems far from clear at this stage given that UltraTech Cement owns cement plants already in each of the four states the proposed purchases are in. It has described the purchase as giving it, …”the opportunity for further strengthening its presence in the highly fragmented, competitive and fast growing East and Central markets and extending its footprint in the Western and Southern markets.” Synergy savings from procurement and logistics are expected to follow with further benefits to be gained from the company’s distribution network. Local and national competitors may not see it the same way and the fallout from a price war could be damaging for smaller producers.

As covered previously, UltraTech Cement seems hell bent on winning its on-going fight against Dalmia Bharat to buy Binani Cement. Rightly or wrongly UltraTech Cement tried to muscle its way into buying Binani by making a bid directly to its owners after it lost an auction for it. Legal wrangling has followed as the insolvency process for Binani Cement has clashed against the auction process of the administrator. At the time of writing it is still far from clear which company will win.

Comparing the prices of the two latest acquisition targets by UltraTech Cement may offer some insight of its motivations. The Binani Cement assets roll in at just over US$125/t of production capacity. Although, as noted below, some of this is located outside of India. The Century Textiles & Industries assets are being purchased for a little over US$100/t. This is interesting as it is lower that the Binani cost, although the close links between BK Birla Group and UltraTech Cement’s owner Aditya Birla may help to explain this.

UltraTech Cement’s milestone as it surpasses the 100Mt/yr capacity level will mark a continuing change in the world’s cement industry as it moves away from Europe and North America to developing economies. As ever the classification is a bit of a fudge given that Global Cement’s top producers list excludes Chinese producers. Partly this arises from the difficulty obtaining reliable data on the Chinese industry. Partly this comes from top producer’s list looking at multinational companies over (extremely) large national ones. Due to this UltraTech Cement remains a regional player. Or it will at least until it (or if it) manages to buy Binani Cement. Some of the assets included in that sale include plants in both the UAE and China. At this point UltraTech Cement’s claim to be the third biggest cement producer in the world will be secure.

India: Dalmia Bharat's subsidiary OCL India plans to build a new cement plant in Odisha. The new unit will have a production capacity of around 1.7Mt/yr and it will include a waste heat recovery system. It will bring the cement producer’s total cement capacity up to around 8Mt/yr in the states of Odisha and West Bengal. The project is estimated to cost around US$545m. The plant is expected to be completed by mid-2020.

India: The National Company Law Tribunal (NCLT) has asked the Committee of Creditors (COC) of Binani Cement to consider UltraTech Cement's revised offer. It has also set 24 June 2018 as the completion deadline of the insolvency resolution process, according to the Press Trust of India. The NCLT also asked the COC to reconsider the resolution plan of Rajputana Properties if the subsidiary of Dalmia Bharat Group was willing to raise its offer over UltraTech Cement’s.

A consortium led by Dalmia Bharat won an auction for Binani Cement with a bid of US$974m in early March 2018. UltraTech Cement then made a direct bid to Binani Cement a few weeks later. However, the Supreme Court blocked UltraTech Cement’s offer in mid-April 2018. UltraTech Cement has since made a raised offer to the resolution professional handling the insolvency process of Binani Cement.

India: Dalmia Bharat has signed a memorandum of understanding with the Ministry of Tourism to maintain the Red Fort heritage monument for US$0.75m/yr. The deal is part of the government’s ‘Adopt a Heritage project’ initiative to persuade private companies to look after the operations and maintenance of national monuments.

India: UltraTech Cement has raised its direct offer to buy Binani Cement to US$1.21bn. Previously it made a direct offer of US$1.11bn to Binani Cement in the form of a so-called ‘comfort letter’ that Binani Industries used to stop the insolvency process. UltraTech Cement made this latest offer to the resolution professional handling the insolvency process of Binani Cement, according to the Economic Times newspaper. The move follows a decision by the Supreme Court on 13 April 2018 to block UltraTech Cement’s first offer. However, the court will consider a plea by a group of operational creditors that is backing the higher offer in late-April 2018.

India: The Binani Operational Creditors Forum (BOCF) is seeking a forensic audit of the insolvency resolution process of Binani Cement due to an alleged lack of transparency. The forum has filed a petition in the Supreme Court, according to the Press Trust of India. Binani Cement owes about US$1.07bn to its creditors.

The Supreme Court previously blocked an out-of-court offer by UltraTech Cement for Binani Cement. A consortium led by Dalmia Bharat won an auction for Binani Cement with a bid of US$974m in early March 2018. However, UltraTech Cement then made a direct bid to Binani Cement a few weeks later. According to the BOCF, the operational creditors are expected to only receive US$23.2m from a total exposure of US$107m if the bid from Dalmia Bharat is allowed to complete.

India: The Supreme Court has blocked an out-of-court offer by UltraTech Cement for Binani Cement. Banks had offered conditional support to UltraTech’s bid, seeking indemnity from Binani Industries, the owner of Binani Cement, against any potential legal action, according to the Economic Times newspaper. A consortium led by Dalmia Bharat won an auction for Binani Cement with a bid of US$974m in early March 2018. However, UltraTech Cement then made a direct bid to Binani Cement a few weeks later.

Binani Industries had deposited US$115m with HDFC Bank to show its commitment to the deal with UltraTech, along with a bank guarantee for nearly US$1bn. However, Dalmia Bharat had sent letters to all the banks involved saying that any settlement initiated by them would be a breach of trust as they had entered into a contract with Dalmia.

India: Dalmia Bharat has sought intervention by the Central Vigilance Commission (CVC) in the insolvency proceedings of Binani Cement. It argues that the lenders’ reported move to allow owner Binani Industries to seek an out of court settlement violates CVC guidelines and circumvents the dedicated insolvency process, according to the Economic Times newspaper.

A consortium led by Dalmia Bharat won an auction for Binani Cement with a bid of US$974m in early March 2018. However, UltraTech Cement then made a direct bid to Binani Cement a few weeks later. In a letter to the CVC Dalmia Bharat alleged that UltraTech Cement’s direct offer was a revised bid in an auction that forbade them.

India: Binani Industries says it has filed an application to stop the insolvency process for its subsidiary Binani Cement. It received an offer from UltraTech Cement to buy its majority stake in the cement producer in late March 2018, according to the Press Trust of India. However, the deal was subject to the ending of insolvency proceedings against Binani Cement whose Credit of Creditors (COC) led by Bank of Baroda had previously approved a bid from Dalmia Bharat.

Meanwhile, Rajputana Properties, a subsidiary of Dalmia Bharat, has asked the National Company Law Appellate Tribunal (NCLAT) to stay the settlement process considered by Binani Cement’s CoC. However the NCLAT refused the request. Previously the NCLAT asked the companies trying to buy Binani Cement to ‘amicably’ settle the dispute.

India: The creditors of Binani Cement have asked it to seek approval from the Supreme Court on an offer made by UltraTech Cement to buy the company outside of the on-going insolvency process. The lenders decided not to vote on UltraTech Cement’s offer, according to the Times of India newspaper. Instead, they asked for Binani Cement’s parent company, Binani Industries, to pay US$115m to show its commitment to the latest deal.

A consortium led by Dalmia Bharat won an auction for Binani Cement with a bid of US$974m in early March 2018. However, UltraTech Cement then made a direct bid to Binani Cement a few weeks later. Branches of the National Company Law Tribunal have since suggested that the companies settle the dispute ‘amicably.’ However, Binani’s creditors fear that Dalmia Bharat is likely to start legal proceedings without full court approval supporting UltraTech Cement’s direct offer.