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Zuari Cem Eyes 2 Buys In South

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BUSINESS STANDARD
Last Updated : Jan 28 2013 | 12:26 AM IST

Zuari Cements, a 50:50 joint venture between the KK Birla promoted Zuari-Chambal Group and Italcementi Spa of Italy, is considering two acquisitions in south India within a year. "The plan is to raise the production capacity of the company from 2.2 million tonne per annum to 4 million tonne in the next year through buyouts," sources said.

According to sources, talks are on with a handful of companies with operations in the south including India Cements-promoted Shri Vishnu Cements Ltd. It was reported last month that the two are close to striking a deal, whereby India Cements will sell its 94 per cent stake in Shri Vishnu Cements to Zuari Cements for Rs 496 crore. Shri Vishnu Cements has a capacity of 1.3 million tonne per annum.

Zuari Cements was earlier a division of Zuari Industries. Last year, it was spun off as a 50:50 joint venture with the Italian company. As per the memorandum of understanding between the two parties, Italcementi's expansion in the south will be through Zuari Cements, though it is free to expand on its own in other parts of the country.

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A couple of months back, Zuari Cements had ramped up the capacity of its Yeraguntla plant from 1.7 million tonne to 2.2 million tonne. Zuari Cements has also entered into a marketing alliance with Cement Corporation of India (CCI). Under the arrangement, Zuari will sell CCI cement produced at its Tandur plant in Andhra Pradesh in the same state as well as in Tamil Nadu and Kerala. This will account for 25-30 per cent of the Tandur unit's 1 million tonne per annum capacity.

Thus, the alliance will enable Zuari Cements to sell an additional 250,000-300,000 tonne of cement in the next year. According to sources, this will add Rs 75-80 crore to the company's turnover over the next year.

Apart from the acquisitions, Zuari Cements is also eyeing a greenfield cement plant in Karnataka. It has applied for a mining lease for limestone deposits in the Gulbarga district. "The deposits are good enough to support a plant with a capacity of over 2 million tonne per annum," the sources said. Earlier, the company had been granted a prospecting licence for the limestone deposits. It has now sought to convert the prospecting licence into a mining lease.

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First Published: Nov 19 2001 | 12:00 AM IST

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