INSUBCONTINENT EXCLUSIVE:
The Emami Group is in exploratory talks with investors such as UltraTech Cement and private equity funds including KKR and Temasek Holdings
to sell stakes in the cement business, valuing it at Rs 5,000-5,500 crore, said people aware of the matter
The Kolkata-based group is trying to reduce debt and focus on its core consumer business.
The Emami management hasn’t yet decided on
whether it should exit fully or partially or undertake asset-level disposals of mines and plants
Emami Ltd shot up by 9.3 per cent to end at Rs 317.95 on Wednesday
It has however dropped 12 per cent in the past month compared with little change in the broader Sensex.
The cement business recently
received regulatory clearance for an initial public offer (IPO)
It’s looking to raise about Rs 1,000 crore through the proposed IPO, which included new shares worth Rs 500 crore, and the rest as an
offer for sale from existing promoters.
Investment bank Nomura, also one of the advisors to the IPO, has been roped in for negotiations on a
sale.
Earlier in the week, the promoters of the diversified Emami Group — with interests in fastmoving consumer goods (FMCG), paper, real
estate and cement — sold an additional 10 per cent stake to raise Rs 1,230 crore and pare debt
In February, the promoters offloaded the first tranche of 10 per cent for Rs 1,600 crore
With the latest sale, the promoters' stake in Emami has dropped to 52.73 per cent, having divested 45.4 million shares in total.
Company
executives told ET that the stake sale was primarily to reduce the debt at the promoter level, which now stands at Rs 2,200
crore.
“Currently, our primary objective and endeavour is to pare the promoter debt to almost zero in six-eight months
There will not be any further dilution of stake in Emami Ltd,” said Mohan Goenka, director, Emami Group
“We are a diverse group and have many assets of value which can be monetised
We are exploring all options, including strategic divestment, initial public offering or stake sale in group assets within the next
six-eight months with an effort to meet our objective of debt reduction.”
KKR, UltraTech and Temasek declined to comment.
Emami Cement
currently operates three manufacturing facilities at Risda in Madhya Pradesh, Panagrah in West Bengal and Bhabua in Bihar with a total
capacity of 5.6 million tonnes
In addition, the firm has mining assets in Guntur in Andhra and near Jaipur in Rajasthan.
Emami started its cement business in 2007 and
markets the product under the Double Bull brand
The company’s primary market encompasses West Bengal, Chhattisgarh, Odisha, Jharkhand, Bihar, Maharashtra and Madhya Pradesh.
The group
has a distribution network of more than 2,200 dealers and over 5,000 retailers in 160 districts, according to its prospectus
In addition, it has set up 110 warehouse-cum-sale depots at various locations to ensure efficient distribution.
Founded in 1974 by RS
Agarwal and RS Goenka, Emami owns businesses in sectors ranging from FMCG and personal care to healthcare, cement, newsprint and paperboard,
biodiesel and edible oil, real estate, solar power, writing instruments and pharmacy retail.
UltraTech, part of the Aditya Birla Group, has
been consolidating through large acquisitions
It acquired part of JP Associates’ cement business in 2017.
KKR and Temasek have been looking at cement assets in the country
KKR bought Dalmia Cements and sold it in 2017 at a 150 per cent return in less than two years
KKR has also invested in south India-based Bhavya Cements through a structured credit deal
The PE firm was also in discussions with the Kolkataheadquartered group for a Rs 1,000 crore structured funding line, ET reported in
February 15, but that did not materialise.
Temasek, among others, was eyeing a stake of up to 20 per cent in Wonder Cement, though the talks
