UltraTech Cement to acquire ABG Cement’s plant in Gujarat
UltraTech Cement, a unit of Aditya Birla Group, has started discussions for acquiring an incomplete cement plant located in the state of Gujarat of ABG Cement, according to the reports.
According to a person closer to the matter, the company has appointed investment banking arm of Axis Bank, Axis Capital for advice on the deal to acquire the cement plant. UltraTech Cement has reportedly expressed interest in completing the project and expanding its cement business.
UltraTech is offering Rs. 4,660 crore at $130 a tonne but some reports indicate that ABGis seeking 5,008 crore at $156 a tonne for the project. The plant, which will have a total capacity of 6.7 million tonne, is still incomplete and the company will have to invest money to complete the plant before making it operational.
Experts have said that ABG Cement cannot seek a premium price because the project requires additional investment for competition. ABGCL, which is promoted by ABG Cement Holdco Pvt Ltd, has already invested 2,525 crore in the cement plant. The company raised a debt of Rs. 1,544 crore for the project and the remaining came from promoter funds and loans. Estimates shows that the cost of the total project is 3,028 crore and it will be operational by the fourth quarter of 2013-14.