India’s Zuari Industries is set to sell its 50 per cent stake in Zuari Cement to Italcementi for Rs 500 crore. The deal is expected to be finalised by the company’s board in its meeting on Saturday.
Currently, Italcementi holds 50 per cent stake in Zuari Cement through its French subsidiary, Ciments Francais SA, France.
The JV was inked in 2001. At that time, Zuari was a single-plant company with a capacity to produce 1.5Mta of cement. Later, it acquired Andhra Pradesh-based Shri Vishnu Cement. This is the third instance of a European cement major gaining management control of a cement company in India.
Zuari Industries plans to use the cash proceeds from the equity sale to finance the expansion of its fertiliser business, sources say. "The group’s management has taken a conscious decision to become a leading player in fertilisers.
As part of the strategy, it has decided to divest its assets in other non-core sectors, including cement," said a source close to the group. The deal has come at a time when cement companies are earning record profits thanks to historically high cement prices across the country.
Going forward, the prospects for the sector look equally bright thanks to the high cement demand coupled with slow capacity additions.