LafargeHolcim to sell Lafarge India

You surely will after this deal.

It is one of India’s leading ready-mix concrete manufacturers.

“We have entered into a letter of agreement with Nirma, subject to approval by the Competition Commission for the divestment of its interest in Lafarge India for an enterprise value of approximately $1.4 billion”, LafargeHolcim said in a statement. The company will fund the acquisition through equal proportion of equity and target level financing. The two firms combined have the capacity to produce more than 60 million tonnes of cement per year, and also have a countrywide distribution network. Patel, who started his entrepreneurial journey in the late 1960s as a manufacturer of detergent, and cycling around towns and villages to sell it, is known for creating low-cost products.

Hiren Patel, Managing Director, said: “This acquisition is a landmark &transformational step for the Nirma group’s cement business”. He named his product Nirma after his late daughter Nirupama. In the 1990s it launched bathing soaps where it replicated its success in the detergent segment.

Nirma was a one-man operation set up in 1969 when first-generation entrepreneur Karsanbhai Patel started door-to-door sales of his detergent powder brand at 3 rupees a kilogram.

Nirma plans to start the bond offering in September, the people with knowledge of the matter said. The company eventually put the project in cold storage. As of now, Nirma has a fairly smaller presence through its Nirmax brand of cement manufactured at its Rajasthan plant. Lafarge had agreed to sell the assets to the MP Birla Group for around ₹5,000 crore in August past year, but the deal fell through due to regulatory hurdles over the transfer of mining rights along with cement assets.

LafargeHolcim, the world biggest cement maker, is selling part of its Indian operation to a local company as the Franco-Swiss group seeks to divest assets amid a deteriorating business environment. These norms, however, were subsequently changed.

Lafarge India owns three cement plants and two grinding stations with a total capacity of about 11 m tons per year.

The agreement also comes barely a week after the multi-billion dollar deal between UltraTech Cement and Jaypee Group’s cement assets, indicating industry consolidation. In the last six months, UltraTech, the industry leader, has seen share prices rise by a third from a low of Rs 2,581 in January to around Rs 3,467 as of mid-morning on 12 July.