Demerged Dalmia Bharat makes listing debut, India

Demerged Dalmia Bharat makes listing debut, India
Published: 27 January 2011

Dalmia Bharat Enterprises Ltd (DBEL), the demerged cement and power business of Dalmia Bharat Sugar & Industries (formerly Dalmia Cement Bharat) swung between valuation of INR860 crore and INR1950 crore on its debut and is trading at INR213 in early morning hours on day 1.

Dalmia Bharat Sugar & Industries, that has become a pure play sugar firm now, was up 4% on Thursday valuing the firm at around INR370 crore. Given the 1:1 share issue in the demerger, the combined value of the demerged company and the original firm is around the same as value of Dalmia Cement Bharat in March when the demerger was announced.

The cement business (housed under Avnija Properties, a subsidiary of the demerged entity) is backed by buyout giant KKR that said it is investing INR750 crore for an undisclosed stake last year, marking the largest private equity deal in the cement industry in India.

Avnija has 9Mta cement manufacturing capacity besides the original firm’s stake in OCL India Ltd (that has 5.3Mta capacity) along with the upcoming green field projects of 10Mta across the country. The money raised from KKR was to be used for both organic/inorganic growth besides de-leveraging.

As a part of the demerger, DBEL issued one share of INR 2 for every one share of the same amount owned by an investor in Dalmia Cement Bharat Ltd. While the cement business is housed under Avnija Properties, the thermal power business is under DCB Power Ventures. This has made DBEL a public listed holding firm of cement and power businesses.

The demerger opened up opportunities for raising fresh capital for disparate businesses. On the one hand, it has also got a commitment from KKR for the cement business, it could well look at fresh funds to expand the capital intensive power business.