Shree Cement budgets for United Cement acquisition

Shree Cement plans a capital expenditure of INR35,000m (US$519.1m) in the current financial year including INR20,000m on the completion of the deal to acquire UAE-based United Cement Co PSC.

The management of Shree Cement, led by managing director HM Bangur, has historically avoided taking over existing capacity because it is of the view that it can set up plants ground up at a much lower cost, reported Livemint.

Shree will spend at least INR15,000m in the current financial year to acquire land and set up grinding units in Odisha, Jharkhand, Maharashtra and West Bengal. These plants will be commissioned in 2020, while the Gulbarga plant will start-up in October 2018.

However, in January this year, Shree Cement agreed to acquire the Abu Dhabi-based firm for an enterprise value of US$305.24m because it was available at a "competitive" valuation of US$75/t of output, according to Subhash Jajoo, Shree Cement’s chief financial officer.

United Cement will be required on completion of a buyback programme as a private firm. The company produces 3.3Mta of clinker and 4Mta of cement.