Cemex SAB de CV, the world’s third-largest cement company based in Mexico seeks entry once again, this time through Kutch.
AHMEDABAD: Cemex SAB de CV, the world’s third-largest cement company based in Mexico, has revived its quest for a presence in India.
After failed talks to acquire the B K Birla group-owned Mangalam Cement a few years back, the $15 billion Cemex is now learnt to be talks with Ahmedabad-based Deepak Cements and Chemicals for a possible acquisition of the latter’s operations in Kutch.
Deepak Cements CMD Hemant Pandey could not be reached for comment.
Cemex’s holding company in Asia, Cemex Asia Holding may be the vehicle for the acquisition, according to sources.
Deepak Cements, which already has a small plant in Kutch, proposes to set up another 3 MTPA unit costing Rs 1,300 crore in Guneri village of Lakhpat taluka in Kutch with an initial capacity of 2,000 tonnes per day. It has acquired the land and recently got permission to carry out hydrographic survey to construct a captive jetty near the cement plant site.
Cemex may buy the existing plant and could also enter into a joint venture for the new project, sources said.
Deepak Cements is expected to sign an MoU with the government in the ensuing Vibrant Gujarat 2007 investors summit beginning on January 12.
An industry source said negotiations have been on since the last three months, but the gridlock is over valuations, the source added.
Ever since taking over British firm RMC Group in 2004 — a move that catapulted it to the third position among the world’s cement makers — Cemex has been on the prowl in India and China.
If Cemex does acquire Deepak Cements, it will be the fourth foreign major to find parking space in one of India’s booming sectors - France’s Lafarge, Swiss giant Holcim, Germany’s Heidelberg and Italy’s Italcementi Group have already entered through various acquisitions. French cement maker Vicat is also on the hunt for acquisitions in India.
Small cement units are good acquisition targets for Cemex because valuations have soared to stratospheric levels. When Holcim acquired Gujarat Ambuja last year, it paid about $220 per tonne, twice what it paid to acquire ACC in 2005.
Interestingly, Kutch is becoming the new cement hotbed IN a state that produces close to 18 million tonnes or about 12% of the country’s output. Sanghi Cements has a 3 MTPA capacity plant in Abadasa in Kutch, which it plans to augment to 8 MTPA in three years.
ABG Shipyard, which is diversifying into cements, is putting up a 1.5 million tonne plant, while Anjan Cements, recently acquired by the Jaypee Group, is also expanding capacity.
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