New Delhi: Dalmia Cement (Bharat) Ltd expects to raise $100 million (Rs462 crore) by March by selling a stake in its subsidiary, Dalmia Cement Ventures Ltd, the parent firm’s managing director said.
“We have been talking to private equity players and we think we can make an announcement this quarter,” Puneet Dalmia told Reuters in an interview on Thursday, adding they were planning to sell up to a quarter in the subsidiary.
Dalmia said the fund raised through the stake sale would be used to add 5 million tonnes of cement capacity in two to four years, as part of the company’s plan to add a total of 10 million tonnes.
Dalmia said total debt funding of Rs3,250 crore for adding 10 million tonnes has been tied up. The equity requirement of Rs1,250 crore will be met through internal accruals and share sale at the parent company and subsidiary level.
“We have already put in Rs250 crore as part of equity,” Dalmia said, adding that it didn’t ‘make sense to raise money at this (share price ) level (in parent company).“
Dalmia Cement will also announce a restructuring plan by March, wherein its four businesses - cement, sugar, power and refractory - will be housed in separate companies. Dalmia said all the four companies would be eventually listed.
“I think we have looked at things (restructuring) from taxation angle and possible structures that can unlock shareholder value and also give us firepower for growth,” Dalmia said.
Dalmia Cement recently upped its stake in family-owned cement maker OCL India to 45.4%from 21.7% earlier, raising hopes of consolidation.
“We have to look at what vision shareholders share relating to growth and risk appetite,” Dalmia said on the possibility of consolidation.
Puneet Dalmia’s uncle, M H Dalmia, holds 24% stake in OCL.
Sugar and Power Play
The company, which operates three sugar plants with a combined capacity of 22,500 tonnes crushed per day (tcd), is also looking at bidding for 3-4 government sugar mills in Karnataka.
“This will give us some diversification and also access to some cogen opportunities,” said Dalmia.
The Karntaka Government has been inviting tenders from private companies to manage its sugar mills on a 30-year concession period.
Dalmia said cement prices have recovered 10% in the current quarter after having fallen 20% in south India — the company’s main market — in December quarter.
Shares in Dalmia Cement closed down 1.24% at Rs186.35 in a broader market that ended down 1.64%.