Chinese cement equipment maker buys stake in Chennai firm

Kochi: Sinoma International Engineering (Hong Kong) Ltd, a part of the Chinese state-run National Materials Group Corporation, has entered the Indian cement equipment industry by acquiring a majority stake in Chennai-based equipment manufacturer LNV Technology Ltd.

Sinoma International has 80 per cent market share in the cement equipment industry in China. It bought 68 per cent stake in LNV Technology for Rs 130 crore. The rest of the share in the joint venture is held by V C Rao, managing director of the company, and LV Technology. VC Rao had around 51 per cent equity share in the company before the deal.

The Chinese firm would provide LNV expertise in research and design, manufacturing, installation and after sales service, says Liu Zhijiang, group chairman, China National Materials Group Corporation (Sinoma). He says a partnership with LNTV will help it serve its Indian clients better. The company would gradually introduce a brand new business model for the local cement plant owners, he adds.

Sinoma International has been present in India in partnership with the building materials major, Lafarge, but its presence was minimal, says Wang Wei, chairman, Sinoma International Engineering. With the joint venture with LNV, the company is expecting to be the leading supplier of cement equipment in India in the next five years, says H J Nielsen, managing director, LV Technology Public, Bangkok.

The joint venture would also look into establishing engineering, procurement and construction (EPC) capabilities, which are not prevalent in the Indian cement equipment industry, says Rao. He says LNV is also looking at enhancing its manufacturing capacity.

"Sinoma is the only company in the world to do this kind of EPC in the segment. That model is not available in India now, which would be brought in through LNVT," he says.

LNVT is projecting $5 million investment in in the next two years and another $5 million investment based on the order intakes of the company, he adds. However, a detailed plan would be ready after the board meeting with the new partner. The company, which has a revenue of around Rs 160 crore, has a backlog of Rs 120 crore. It is also working on a project worth $55 million in Nepal.

Globally, 80 per cent of the cement equipment market is owned by four companies, including Sinoma International, FLSmidth based in Denmark, Polysius AG and Germany's KHD.