IDFC to buy 6.6% in Andhra Cements
Infrastructure Development and Finance Corporation (IDFC) is to acquire a 6.55% stake in Andhra Cements to help part-fund the GP Goenka group company’s Rs 400-crore expansion plans. Separately, IDFC and HDFC have also extended a Rs 275-crore debt to Andhra Cements.
The company will spend Rs 100 crore of its own funds. HDFC, however, will not have any equity in the company. Andhra Cements is now adding another 3 million tonne to take its total capacity to 4Mt. The expanded capacity is likely to go on stream by early 2009.
Talking to Et, Andhra Cements chairman GP Goenka said: “The total cost of the project is estimated at Rs 400 crore. Apart from the Rs 300 crore, we are receiving funds from financial institutions through a mix of debt and equity. We will be infusing another Rs 100 crore from internal accruals.” The promoter group owns around 77% of Andhra Cements. The surge in demand for cement has been fuelled by increase in construction activities.
Currently, all cement companies are on expansion spree. through both greenfield and brownfield expansions. The sector has also witnessed large-scale mergers and acquisitions (M&A) forcing private equity and financial institutions to increase their exposure in the Indian cement sector.
Mr Goenka said there is a surplus capacity of around 10Mt in Andhra Pradesh. Andhra Cements is focusing the neighbouring states and export market for growth.
Published under Cement News
