Shriram EPC, part of the financial services major Shriram Group, is expected to enter the Indian cement sector by picking up a majority stake in Sree Jayajothi Cement, according to local press reports. Should the move be approved, Cimpor is thought to be in line as the group seeks a strategic European investor.
Shriram EPC's board is said to have approved acquiring a significant equity share capital of the cement producer by partially converting the dues owned by Sree Jayajothi into equity.
Shriram EPC, which provided EPC services to the Sree Jayajothi’s cement plant in Andhra Pradesh, has invested its own money for the projects. Shriram will seek shareholders’ approval through a postal ballot and hopes the deal can be completed over the next couple of months, the Financial Express quoted T Shivaraman, managing director and CEO of Shriram EPC as saying.
"For us it is a strategic move, for the group it is a diversification to get into cement business. This move will have long term benefits for us. As Sree Jayajothi could not return the money which we have invested over the years, we thought it fit to convert the dues into equity. We are converting part of the dues into equity and it will be for majority stake," Shivaraman said.
"We will keep watching the developments and have no plans to either look for strategic partners or change the name of the company at this point in time. We will try to run the plant efficiently and will keep a look out for future prospects," he added. "The company will discuss with group companies and may add another group company as equity partner of our dues."
Jayajothi Cements is part of the diversified Jayajothi Group of Tamil Nadu. Established in 2006, the company has a 3.2Mta greenfield cement plant and a 2Mta clinker facility in Kurnool district, Andhra Pradesh.
Shivaraman said if required it could tap private equity investors to raise additional funds. The Business Standard (BS) reported that the company will bring in a strategic European partner and even though it would not reveal the identity, sources close to the development have said Cimpor is the front runner. Independentl, Cimpor had already been negotiating with the promoters of Jayajothi to acquire 51 per cent stake in the Rajapalayam-based group, according to BS reports.
