A tug of war between UltraTech Cement Ltd and Dalmia Bharat Ltd over the acquisition of Binani Cement Ltd’s assets has intensified.

In the latest twist, UltraTech Cement has offered to pay Rs7,266 crore to acquire Binani Industries Ltd’s 98.43% stake in its cement unit (Binani Cement) subject to termination of insolvency proceedings.

The UltraTech Cement board has also agreed to issue a letter of comfort to Binani Industries, committing Rs7,266 crore funding. The latter is now seeking to stop insolvency proceedings of the cement unit.

Ever since the Binani Cement assets were put on the block a few months ago, it has garnered a lot of interest from a range of suitors.

Cement companies including UltraTech Cement, HeidelbergCement India Ltd, JSW Group, Dalmia Bharat, Ramco Cements Ltd, and billionaires Rakesh Jhunjhunwala and Radhakishan Damani were reported to be in the race to buy the debt-laden company.

Last week, the committee of creditors approved Dalmia Bharat’s bid of around Rs6,300 crore. Following that, UltraTech Cement began aggressive countermoves challenging the committee’s decision.

Binani’s cement assets include a 6.25-million-tonne (mt) integrated cement unit in Rajasthan and 5mt grinding units in the overseas markets of China and Dubai. These assets are said to be the last of their kind, having good quality of limestone reserves, with a potential for brownfield expansion.

No wonder then the cut-throat competition.

As for financials, in fiscal year 2017 Binani Cement had gross consolidated sales of Rs2,100 crore, of which domestic sales were Rs1,500 crore, and debt of Rs4,200 crore, said a Kotak Institutional Equities report. It should be noted that Binani Cement has a fibreglass business as well.

For UltraTech Cement, which is among the top pan-India cement makers, successful acquisition will aid in consolidating its presence in the northern market, especially south Rajasthan.

According to analysts, at an enterprise value of around Rs7,300 crore, the transaction implies a value of $102/tonne, which is attractive compared to its previous acquisition of Jaiprakash Associates Ltd’s six integrated cement units.

Also, given UltraTech Cement’s large balance-sheet size, the company has the wherewithal to absorb Binani Cement’s losses, without severe stress on its overall debt position.

Further, UltraTech Cement may see some savings on the logistics front, but it is too early to quantify these.

On the other hand, for south-based Dalmia Bharat, a decision in its favour would give the company access to newer markets of north India, taking its total capacity to around 40mt per annum.

Interestingly, this would be the third acquisition of a bankrupt cement firm by Dalmia Bharat, after Murli Industries and Kalyanpur Cements.

While a final decision on the acquisition is awaited, the winner would face stiff competition from Shree Cements Ltd, which is a dominant company in Rajasthan, and other regional cement producers such as JKCement Ltd.

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