JSW Cement, led by Sajjan Jindal, is looking to buy the promoter stake in Orient Cement Ltd (OCL) from CK Birla. This move comes as the cement sector sees consolidation, with both the Aditya Birla and Adani groups also interested in OCL’s 8.5 million tons per year capacity.
The promoter stake in Orient Cement, held by the Birla family and private investment vehicles, is 37.9%. Buying this stake would trigger an open offer for an additional 26% stake from minority shareholders. OCL’s shares have risen 56% in three months, and the total transaction for the 63.9% stake could be around Rs 4546.54 crore.
JSW’s interest adds another contender to the mix. The Adani and Aditya Birla groups have been in talks with CK Birla since late last year, when JP Morgan started the sale process. In 2022, these groups competed for Holcim’s India assets, with Adani emerging as the second-largest player in India’s building-materials industry after winning the $6.5 billion acquisition.
With Adani and Ultratech’s ongoing negotiations facing delays, JSW saw a chance to enter the race. Recently, Adani acquired Penna Cement, and Ultratech increased its stake in India Cements to a majority control.
JSW Cement plans to list its cement business next year, and acquiring OCL could help in this process.
Despite the interest, there is no guarantee these discussions will lead to a deal. A CEO from a rival company noted that it’s a seller’s market, and Birla will likely sell to the highest bidder.
Orient Cement has a limestone mine of 8 MTPA, and the company aims to double its capacity with a Rs 2000 crore investment. It has reopened its Rajasthan mines and plans to enter Northern Indian markets with over 3MTPA capacity.
Orient Cement’s recent performance includes an 81% utilization rate in Q4, with premium cement sales increasing to 22% of total volume in FY24.
JSW Cement, with a current capacity of 16.6 MTPA, aims to reach 26 MTPA by FY26 and 50 MTPA by 2030. OCL’s manufacturing is spread across Telangana, Maharashtra, and Karnataka, supplying to 11 states. A successful acquisition would boost capacity and market share in existing and new markets. Orient Cement has outlined a Rs 1000 crore capital expenditure for the current fiscal year, focusing on expansion in Telangana and Karnataka.
