Wednesday, July 19, 2006
HeidelbergCement strengthens its position in India
HeidelbergCement plans to take over the majority of the Indian cement company Mysore Cement Ltd, in order to gain access to the central and southern Indian markets. Mysore Cement is a publicly listed cement company with integrated cement plants in Damoh (north central India) and Ammassandra (southern India), and a grinding plant in Jhansi (northern India). Damoh and Jhansi supply, among others, the market in Bhopal, Lucknow; Ammassandra logistically has a good access to the rapidly growing Bangalore area. In 2005, the cement and clinker sales amounted to 2.2 million tonnes with a total capacity of 2.6 million tonnes.
In the first stage, HeidelbergCement intends to take over a stake of 41.7% by a capital increase. Upon completion of the capital increase, HeidelbergCement plans to acquire an 8.4% stake from Birla Group, Mysore Cement’s main shareholder. This acquisition will give HeidelbergCement more than a 50% stake in Mysore Cement. The buying price for this transaction will amount to about USD 100 million. Pursuant to Indian law, HeidelbergCement is then obligated to make a public tender offer.
In the last 10 years, the Indian cement market has grown about 8% yearly. After China, India is the second largest cement consumer in the world. Due to large population growth and expansion of infrastructure, a dynamic development of construction activities is expected in the coming years. In 2005 the cement consumption grew by 11% to approximately 136 million tonnes. The domestic cement production facilities are presently operating at full capacity.
“The acquisition of Mysore Cement is in line with our long-term strategy of step-by-step expanding our presence in emerging markets,” says Dr. Bernd Scheifele, Chairman of the Managing Board at HeidelbergCement. “With its activities in central and southern India, Mysore Cement offers a good starting point for supplying cement to the rapidly developing markets in the western part of India. With the existing grinding plant in Mumbai, our capacity in India will reach about 3.5 million tonnes of cement.”