In a sign that it still has an appetite for inorganic growth, HeidelbergCement is set to acquire stake in Shiva Cements, based in Rourkela, Orissa. While a confirmation could not be obtained, sources said the German cement major is in talks with the company’s promoters and corporate bodies.
At present, the promoters - Rajendra Prasad Gupta and Sudha Gupta - hold 8.37%, corporate bodies 11.4% and IDBI 5.3% in Shiva Cements. The public holds 70%. The company, incorporated in 1985, has a capacity of 1.77 lakh tonnes, which can be ramped up to 1Mt.
Heidelberg currently has a total capacity of 3.1Mt in India. The company, which entered the country through a 50:50 joint venture with Indorama Cement and acquired Mysore Cements last year, is also learnt to be in talks with Gujarat Sidhee and another cement manufacturer to buy stakes.
However, when contacted, Rajendra Prasad Gupta, managing director, Shiva Cement, said, "At this stage, we are not selling any stake to any multi-national company. I cannot give any comments on market news."
Asked if the promoters were open to selling their stake in future, Gupta said, "In future, we may analyse or think of a stake sale."
Analysts pointed out that Shiva Cements has been financially unstable for the past couple of years. Not only has it failed to register any profit in the last three-four years, but is also not running full steam due to working capital shortage, they said.
Experts, though, maintain a firm outlook on the industry. According to them, domestic cement demand is likely to cross 200 mt by 2010 from the current 150 mt, growing by 8-10% annually. The boom in housing and construction activities, rise in retail malls and more investment opportunities in infrastructure will drive the industry.
According to a research report, the demand for new houses required in India is likely to touch 10 million by 2030. Currently, 1.21bn people live in 250 million homes - 175 million in rural areas and 75 million in urban areas.