Binani Cement, part of the Rs 15bn (US$371m) Binani Group, announced it will acquire a 49 per cent stake in a cement plant in China from Shandong Rongan Group.
It is the first time that any Indian company has sought to acquire a cement plant in China.
A spokesman for Binani Cement said the capacity of the Chinese company is 400,000t. This can be raised to over 2Mt over the next few years given the large limestone deposits it possesses.
Binani will pay US$11m to acquire 49 per cent stake in the Chinese company located in Shandong province. The cost of acquisition works out to US$33/t against the going rate of US$50-70 there.
The spokesman said though the investment is small, the acquisition presents a huge opportunity for the company given the large capacity expansion that will be possible. Binani would sell part of the cement production in China itself while it also plans to export to the Middle east and Africa.
The company, which posted turnover of Rs 7.50bn last year, will be able to make cash profits from the Chinese acquisition over the next three years, the spoksman said.