Srinivasan to buy 11.91% more in India Cements

Sanmar group sold part stake to raise resources for its chemicals business.

The promoters' holding pattern in India Cements is going to be reshuffled on September 16. While the total promoters' holding would remain unchanged at 44.97 per cent, 11.91 per cent of the equity would change hands for about Rs 192 crore (based on the September 9 price).

N Srinivasan, vice-chairman and managing director, India Cements, is going to acquire 11.91 per cent of the equity stake from co-promoter, the Sanmar group, according to the information the stock exchanges received from the company.

The transaction would take Srinivasan's holding to about 31.88 per cent, while the Sanmar group will hold 13.09 per cent.

The reshuffle is to happen by means of a block deal on one of the stock exchanges on September 16. A public offer would not be triggered by the reshuffle as the sale is going to take place between the two promoters.

Sources close to the developments said the Sanmar group has decided to offload a part of its stake to raise resources for its chemicals business.

The company's management has been in the hands of the Srinivasan group for some time. The company was founded jointly by the two groups. The Sanmar group head, N Sankar, is also chairman of India Cements.

The current development follows a significant institutional investment into India Cements and an improved financial performance of the company.

This year India Cements raised around Rs 655 crore from Asian Debt Management, an institutional investor. Of the Rs 655 crore investment, Rs 250 crore was in the form of equity. And that came in the form of optionally convertible debentures and equity warrants.

As of now, Asian Debt Management does not hold equity in the company, as it has not converted its warrants. It is, however, represented on the company's board. India Cements has also indicated that it would consider raising more resources in future by way of global depository receipts issue.

In 2004-05, India Cements recorded a net profit of Rs 4.58 crore (as against a net loss of Rs 95.93 crore) and net sales of Rs 1,386 crore (Rs 1,233 crore).

The company has an installed cement production capacity of 8.81 million tonne. With its cement plants all located in south India, India Cements is the largest among the manufacturers in the southern region.