Nirma Group's Nuvoco Vistas Corp to buy Vadraj Cement via NCLT route

Acquisition to increase the fifth-largest cement maker's capacity by 20 per cent

Nirma Group promoted Nuvoco Vistas Corp on Monday said it has emerged as the successful applicant for Vadraj Cement, in a corporate insolvency resolution process (CIRP).

 

The company did not disclose the transaction value, but termed it a “value-buy.”

 

At present, Nuvoco operates 25 million tonnes per annum (MTPA) of cement capacity, which will increase to around 31 MTPA, up 20 per cent, with this transaction.

 

In its statement, Nuvoco said it has emerged as the successful resolution applicant (SRA) of Vadraj Cement, which is currently undergoing a CIRP.

 

“The resolution plan submitted by Nuvoco has been approved by the committee of creditors (CoC), and a letter of intent (LoI) has been issued,” Nuvoco said.

 

 

Nuvoco is promoted by Niyogi Enterprise, an investment vehicle of the Nirma Group.

 

In 2016, Nirma Group bought Lafarge India’s assets in a $1.4 billion deal, which forms a significant part of Nuvoco’s current capacity. 

 

Since that deal, Nuvoco has acquired one other asset in 2020 —  100 per cent shareholding in Emami Cement with an installed capacity of 8.3 MTPA — for an enterprise value of Rs 5,500 crore.

 

Vadraj Cement’s existing facilities include a 3.5 MTPA clinker unit in Kutch, a 6 MTPA grinding unit in Surat, limestone reserves, and a jetty.

 

However, these facilities are not operational at present.

 

In addition to the undisclosed deal value, Nuvoco said a phased investment will be made, spread over 15 months, towards the refurbishment of assets and to drive operational improvements across Vadraj Cement plants.

 

The estimated target date to commence production is around the third quarter of FY27, subject to approvals, said Nuvoco.

 

Once operational, the transaction will increase Nuvoco’s capacity to 31 MTPA – taking it to 19 MTPA in the East, 6 MTPA in the North, and 6 MTPA in the West.

 

Nuvoco is already the fifth largest cement maker by capacity in India. The company expects the latest transaction to solidify its position for the long term.

 

The transaction will be implemented by a wholly-owned subsidiary of Nuvoco and it intends to fund the transaction without a significant rise in debt levels.

 

In an October note on the company, analysts with PL Capital said, “Q2FY25 debt increased to Rs 4,500 crore due to cyclical impact of working capital.”

 

It added, “Current debt levels of the company hinder the growth plan, which we expect would result in market share loss in the medium term.”

Nuvoco, however, on Monday said, “Overall investment, including refurbishment of assets, will be more cost-effective than greenfield or brownfield expansions.”

 

Vadraj Cement, as of June, has admitted claims of worth Rs 8,180.61 crore, from secured, unsecured and other operational creditors combined, according to documents available on the website.

 

The company, formerly ABG Cements, was admitted to National Company Law Tribunal (NCLT) in 2024 for an insolvency process.