Madras Cement in talks to sell Bengal unit

MUMBAI/CHENNAI: Madras Cements, the flagship enterprise of Chennai-based Ramco Group, is holding talks with European giantsLafarge andHolcim to divest itscement grinding unit in West Bengal for roughly Rs 350 crore, said sources briefed on the matter.

PE giant KKR-backed Dalmia Cements had evinced early interest but has dropped out of the deal-making now.

"We have been approached by a number of cement manufacturers to sell the grinding unit. At present we are only exploring the offers made by these people. No decision has been taken as yet,"Ramco Group vice-chairmanP R Venketrama Raja told TOI. A Lafarge spokesperson declined to comment, while Holcim could not be reached for response.

The Rs 2,636-croreMadras Cements moves clinker (an intermediary product in cement manufacturing) from its existing cement plant at Jayanthipuram in Andhra Pradesh in bulk and grinds it with gypsum and bags them as cement to sell in the eastern markets. The unit located at Kolaghat in Purba Medinipur district in West Bengal was set up to feed cement from the surplus southern to eastern region.

Since clinker can be moved in bulk, logistics costs can be brought down as bagged cement transportation is more expensive than clinker transportation.

Madras Cements has capacity in excess of 10 million tonne per annum after doubling the production facility at Ariyalur plant in Tamil Nadu. The country's major cement manufacturers have been ramping up capacity in the southern states, especially Tamil Nadu, prompting players like Madras Cements to protect their turf.

On Monday, Madras Cements dropped 0.54% in to close at Rs 82 on the BSE.