JP Morgan to take 25 per cent in Binani Cement

JP Morgan to take 25 per cent in Binani Cement
Published: 28 October 2005

JP MORGAN will acquire 25 per cent stake in Binani Cement Ltd, India as part of a debt and equity arrangement worth Rs 250 crore.    The transaction will enable Binani Cement double its cement capacity from 2.25Mt to 4.5Mt at a cost of Rs 450 crore, said a news release from Binani Cement Ltd.  Mr Braj Binani, Chairman of Binani Group said the partnership would enable rapid growth for Binani Cement.  

"This unique transaction structure enables Binani Cement to achieve multiple objectives of financial restructuring and funding for doubling of cement capacity while establishing an attractive valuation benchmark of over US$100 per tonne for Binani Cement," said Mr Rajiv Memani, CEO and Country Managing Partner, Ernst & Young India who were sole financial advisors in the deal.  

Binani Cement, based in Rajasthan has 2.25Mta capacity. In the current fiscal Binani Cement is targeting an EBITDA of Rs 120 crore and PAT of Rs 35 crore.  Apart from expansion plans, the company also plans a lignite-based power plant to augment its existing 20 MW captive power plant. This would translate into significant cost savings and add to profit margins, said the release.