Cemex’s India entry plans have hit a roadblock again due to the higher valuation being sought by Murli Industries and the order of the Securities and Exchange Board of India (Sebi) on insider trading, according to two sources close to the development.
Murli has an existing capacity of 3Mta at Chandrapur in Maharashtra and limestone reserves for the same, which it has been looking to sell off. It was in talks with Ambuja Cements and Italcementi for sale of the assets before Cemex entered the scene.
"Earlier, Murli was in talks with Ambuja. It was asking for US250/t and after the third round of discussions, Ambuja walked away. Later, Italicementi did due diligence, but nothing worked out. Finally, they have been talking to Cemex. Murli has already rejected what Cemex has offered in the last four rounds of talks, so it is unlikely Cemex will take this deal seriously. Nothing is happening in the deal as of now," a source said, requesting anonymity.
"The deal (with Cemex) is in the doldrums, first because Murli has been seeking higher valuation. In fact, most of the sellers are asking for 80-100% as the last 2-3 deals happened at that valuation," said one person.
"But that is not the benchmark and assets also need to be considered. The last deal where France-based Vicat SA paid $220 per tonne to Hyderabad-based Bharathi Cement happened because the plant is new and there is a possibility of expansion; also, it has good limestone reserves. Murli’s limestone reserves are not of that great quality and you cannot take it out of Maharashtra. Also, the plant is not new. So, seeking the same kind of valuation is not fair," this person said.
Murli is separately trying to put up two more plants in Rajasthan and Karnataka, which it will run on its own, the sources said.