Just months after paying Rs 198 crore for buying out Cement Corporation of India's Yerragun-tla unit, the Rs 832-crore, south-based cement player, India Cements has hit the take-over trail again.
It is eyeing Tamil Nadu-based Dharani Cements, which has a capacity of 6.5 lakh tonnes and owns three mining leases and nearly 800 acres of limestone deposits near Reddipalayam in Tamil Nadu.
Top industry sources in Mumbai said India Cements (ICL) is keen to acquire a controlling stake in Dharani and may have already made a formal bid. Cement analysts said ownership of limestone deposits is crucial as all such deposits in Tamil Nadu have already been leased out.
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For a company to increase production, it is essential to acquire existing units with mining leases, they added. Madras Cements, another south-based cement major is also learnt to be interested in Dharani.
When contacted, N Srinivasan, vice chairman and managing director, India Cements, denied any such move.
"We have not made a bid for the company," he said. He refused to comment however when asked if India Cements is interested in bidding for Dharani.
There was no response to a faxed questionnaire sent to Dharani. Top executives could not be contacted as they were in a meeting all day.
The acquisition would make sense for India Cements as it has recently set up a 0.9 million tonne dry process plant along with a grinding unit in Dalavoi, Tiruchirapalli district.
The unit is operating at 70 per cent capacity.
Meanwhile, ICL will commission a 0.9 million tonne plant in June this year, Srinivasan said.
The unit at Tandur in Andhra Pradesh had been taken over by India Cements Ltd alongwith the Visaka Industries' acquisition.
The acquisition would also fit in well with ICL's grand plan of achieving a capacity of 10 million tonnes by the turn of the century. After the acquisition of Visaka Industries and Cement Corporation of India's Yerraguntla unit, ICL's total capacity is close to five million tonnes.
Madras Cements was planning to set up a 0.5 million tonne cement plant in Tamil Nadu and a ready mix concrete plant in Chennai.
Besides, a 0.5-1 million tpa plant was to be set up in Trichy, part of a plan to take cement manufacturing capacity to 3.5 million tpa.
The project was to be funded through internal accruals and debt.
Cement analysts said both ICL and Madras Cements are formidable players in the South and are expected to fight a pitched battle for Dharani Cements.