Market rumours that cement major Grasim Industries is eyeing a stake in Chennai-based India Cements, taking its stock up to a 52-week high of Rs 210.70 on Tuesday. India Cements has a total capacity of 9Mta and posted net sales of Rs 1,162 crore for fiscal 2005. Grasim has a capacity to produce 31Mta. The India Cements stock ended the day at Rs 204.
India Cements vice-president, corporate finance, VM Mohan denied the developments. He said, "We are not in talks with Grasim. Nor are we looking at investments from private equity now. But we are raising Rs 337.5 crore for brown-field projects either through FCCB or GDRs." The funds will be used for upgrading and increasing capacities by 2Mta.
A Mumbai-based analyst suggests: “When a company has just turned around, it doesn’t make sense to sell a stake." India Cements will want to cash in on the infrastructure activities in south India, where it is based. The March quarter saw cement prices raise to an all-time high of Rs 185-195 per bag (50 kgs) in the southern market.
Meanwhile... Mysore Cements, Prism Cement, Shree Cement and Madras Cements have gained substantially over the last 3-4 of weeks on buzz about multinational cement majors Lafarge, Holcim, HeidelbergCement and Italcementi looking for possible acquisitions in the mid- and small-cap cement space in India.
Mysore Cements has risen by 23.80 per cent in the last one month to Rs 51.50 while Prism Cement gained by a hefty 51.17 per cent to Rs 38.85. Similarly, Madras Cements flared up 40.46 per cent to Rs 2,948.45 from Rs 2,099.10 and Shree Cement rose 23.80 per cent to Rs 1,084.15 while India Cements went up 24.81 per cent to Rs 204 during the last one-month period.
Many private equity and debt restructuring funds have already picked up chunks of various companies, thereby lending credence to talk of further deals on the horizon. GE Capital, ADM, JP Morgan, DSP Merill Lynch, and Actis have picked up stakes in Sanghi Cement, Saurashtra Cement, OCL, Dalmia Cement and Binani Cement.