HeidelbergCement has acquired a majority stake of 51 per cent in the Bangalore-based Mysore Cement for US$100m. The buyout will be followed up by an open offer to acquire a further 20 per cent share in the company from the open market. The sale price puts Mysore Cement’s valuation at US$119.34 per tonne.

In January, Holcim acquired a 14.8 per cent stake in Gujarat Ambuja for Rs 2100 crore, putting the Indian company’s valuation at close to US$200 per tonne. Less than 18 months ago, more profitable ACC, with 18Mt cement capacity, was valued at US$105/tonne," said Urmik Chhaya an analyst with Alchemy Shares and Stock brokers.

But sources close to the HeidelbergCement-Mysore Cement deal say that the enterprise value is closer to US$90 per tonne as a portion of the money put in by HeidelbergCement will go towards paying off Mysore Cement’s debt and making it debt-free.

Sources close to HeidelbergCement note that it was now working out a strategy to increase its capacity in India including that of Mysore Cement. It currently has a capacity of 3.1Mt in the country after the Mysore Cement acquisition. Mysore Cement has an installed capacity of 2.6Mta, but currently only 2.1Mta production capacity is being utilised.

"There is some inefficiency and other structural issues, which we shall address once we formally take control," sources said. Sources pointed out that HeidelbergCement could invest close to Rs 100 crore more for realising the entire potential of the Mysore Cement plant at Amarasundara in Karnataka, which is an integrated plant with both grinding and clinker facilities.