Binani Cement is in talks to acquire a cement firm in Turkey for around Rs 1,000 crore as part of its strategy to more than double its production capacity by two years.
A person privy to the development said the target company has an annual production capacity of 2 million tonne and the deal is likely to be sealed by March next year. He, however, declined to disclose the identity of the overseas firm.
The person said, requesting anonymity as he is not supposed to talk on the deal now, the Binani board last week approved the foreign acquisition which would be financed equally by internal accruals and debt. Rajasthan-based Binani has been working on a plan to scale up its annual capacity from 6 million tonne to 14 million tonne by 2011-12.
When contacted, Binani Cement managing director Vinod Juneja said the company had appointed investment bankers for the Turkish acquisition. However, he declined to share further details. “We will inform the stock exchanges at an appropriate time.”
A cement analyst said Binani intends to expand its base in overseas markets before the domestic market is flooded with over capacity. According to Cement Manufacturers Association (CMA) estimates, the country’s cement manufacturers will add 50 million tonne to current production capacity of 220 million by December.
This will create pressure on price of the commodity. The capacity will go up 330 million tonne in three years. Binani also plans to spend about Rs 800 crore in next two years for setting up a 2.5-million-tonne per annum clinker plant in Gujarat.
Currently, Binani’s key markets are Rajasthan where it has 15% market share, Haryana (9% market share), Delhi (8% market share) and 7% market share in Gujarat. It recently announced that it would start grinding units in Dubai and cement manufacturing unit in China.
BY: ASIM SINGHAL
PGDM IIIrd SEM.
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