Meghalaya based Star Cement, a subsidiary of Kolkata-based Century Plywoods has put its decision to sell 10-15 per cent on the backburner given the slowdown and depleting valuations.
“At the moment the exercise is off, given especially the fact just over the past few days the market has lost over 20 per cent in value. We do not think we will get an acceptable price at the moment,” said Sajjan Bhajanka, managing director, Century Plyboards.
The deal size, inclusive of debt was being pegged at $250- $275 million (Rs 1,000- Rs 1,200 crore). Bhajanka said that the company had earlier engaged Morgan Stanley as advisers.
“Morgan Stanley advised us against going ahead with the sale. In fact the potential buyers including players like Lafarge are in trouble and might not be able to go ahead with the deal,” Bhajanka said.
Also, given the fact that the deal is off, the company might not pay dividends to shareholders this year.
Bhajanka explained that the money from the sale for dividends and would have gone towards investments in the business itself.
Star Cement is a popular brand of Cement Manufacturing Company Ltd (CMCL).
CMCL is a 70.48 per cent subsidiary of Century Plyboards.
It is also a dominant cement player in the Northeast, and has capacity of 1.2 million tonnes (mt) out of its plant in Meghalaya.
However, the company is currently in the process of planning investments worth Rs 1,100 crore in another clinker plant in Meghalaya which will take its capacity to 1.75 mt.
Also on the back of this investment, the company will be able to supply production to two additional plants it is building in Guwahati and Bihar. After the two plants are complete the company would have added 3.2 million tonnes grinding capacity.
Once completed, this is expected to take up the total capacity to 4.4 mt by the end of 2012.
Century Ply to invest Rs 580 crore in laminates and ply board expansion
Century Ply, the biggest producer of laminates and Plyboards in the country is set to invest Rs 580 crore in greenfield and brownfield expansion with an aim to double capacity within a year and half.
“We will invest Rs 40 crore each in a capacity expansion investment in Kolkata and Kandla. Kandla will be a new plant over 16 acres. Also a new plant is being planned in Andhra Pradesh over 85 acres at an investment of Rs 500 crore,” said Bhajanka.
