 "A worker unloads a sack filled with cement at a railway yard in Ahmedabad")
In a blow to global cement giants Lafarge and Holcim, the Competition Appellate Tribunal (Compat) on Wednesday stayed their merger in India till the next hearing on May 9.
Lafarge would not be able to sell its India assets, which is also sought after by many cement companies such as Ramco Cements, CRH, JSW Steel and Piramal Enterprises.
The Competition Commission of India (CCI) had approved the merger for a second time in February after Lafarge told the regulator that it would sell its entire assets worth about Rs 10,000 crore.
The CCI had earlier approved this merger in March 2015 on the condition that Lafarge sell two of its cement plants, in Chhattisgarh and Jharkhand, which had a total capacity of 5.15 million tonnes (mt). They were valued around Rs 5,000 crore.
Lafarge was unable to sell those plants as the Mines and Minerals (Development and Regulation) (Amendment) Act came into place that barred the transfer of rights of limestone mines attached with cement plants. This prompted Lafarge to present a fresh proposal from divesting its entire assets, which was approved in February.
Following this, Dalmia Cements moved Compat against CCI's approval.
“We argued before Compat that CCI's second order is invalid as there is no provision under the Act which gives CCI the power to pass the second order when the first had not been followed. Prima facie Compat accepted our arguments and has stayed the operation of the CCI’s order till the next date of hearing," said Abdullah Hussain, partner at Luthra and Luthra, which represented Dalmia Cements.
Dalmia Cements also questioned the order dated March 30, 2015, on the ground that the parties failed to implement the order passed by the CCI within the specified time. However, Compat Chairman G S Singhvi said he didn't considered it necessary to take notice of this.
French cement giant Lafarge last month appointed Arpwood Capital and Citi as investment bankers to sell the India operations, which has an annual production capacity of 11 mt.
Apart from various cement companies who have shown interest in purchasing these assets, private equity giant Blackstone Group has also reportedly thrown its hat in the ring.
Lafarge would not be able to sell its India assets, which is also sought after by many cement companies such as Ramco Cements, CRH, JSW Steel and Piramal Enterprises.
Read more from our special coverage on "COMPETITION COMMISSION OF INDIA,CCI,"
The Competition Commission of India (CCI) had approved the merger for a second time in February after Lafarge told the regulator that it would sell its entire assets worth about Rs 10,000 crore.
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Lafarge was unable to sell those plants as the Mines and Minerals (Development and Regulation) (Amendment) Act came into place that barred the transfer of rights of limestone mines attached with cement plants. This prompted Lafarge to present a fresh proposal from divesting its entire assets, which was approved in February.
Following this, Dalmia Cements moved Compat against CCI's approval.
“We argued before Compat that CCI's second order is invalid as there is no provision under the Act which gives CCI the power to pass the second order when the first had not been followed. Prima facie Compat accepted our arguments and has stayed the operation of the CCI’s order till the next date of hearing," said Abdullah Hussain, partner at Luthra and Luthra, which represented Dalmia Cements.
Dalmia Cements also questioned the order dated March 30, 2015, on the ground that the parties failed to implement the order passed by the CCI within the specified time. However, Compat Chairman G S Singhvi said he didn't considered it necessary to take notice of this.
French cement giant Lafarge last month appointed Arpwood Capital and Citi as investment bankers to sell the India operations, which has an annual production capacity of 11 mt.
Apart from various cement companies who have shown interest in purchasing these assets, private equity giant Blackstone Group has also reportedly thrown its hat in the ring.
