India's Dalmia Bharat to acquire 5.2 million mt/year cement assets from JAL

Dalmia Cement, a wholly owned subsidiary of Dalmia Bharat Ltd., has executed a business transfer agreement with Jaiprakash Associates and Adani Infra (India) to acquire cement plants in Madhya Pradesh and Uttar Pradesh, adding 5.2 million metric tons/year of cement capacity and 3.3 million mt/year of clinker capacity.

The acquisition will lift Dalmia Bharat's cement capacity to 54.7 million mt/year from 49.5 million mt/year immediately upon consummation, while commercial production at the acquired plants is expected to begin in Q2 FY27, Dalmia said in a statement on May 22.

The deal is valued at $310 million and is expected to close within two weeks, according to the statement.

Dalmia said the assets would provide faster access to central India markets than a greenfield project and support its stated objective of becoming a pan-India player.

Portfolio expansion

The acquired portfolio comprises the Rewa integrated unit with 1.1 million mt/year of cement capacity, 3.3 million mt/year of clinker capacity, and 62 megawatts of thermal power, alongside the Chunar grinding unit with 2.5 million mt/year of cement capacity and 37 MW of thermal power, the Churk grinding unit with 1 million mt/year of cement capacity, and the Sadwa blending unit with 600,000 mt/year of cement capacity, it said in the statement.

Rewa and Chunar have railway sidings, while Churk uses a joint railway facility with the Churk power plant owned by Adani Power Ltd.

Dalmia said Rewa also has more than 100 million mt of limestone reserves.

The company also identified the debottlenecking potential of 500,000-700,000 mt/year of clinker and 1.5-2 million mt/year of cement across the acquired assets.

Strategic rationale

Dalmia said it had entered into an agreement with Jaiprakash Associates in December 2022 for the sale of the business assets, along with related agreements intended to settle disputes, including those under a long-term clinker supply agreement.

The transaction was not completed at that stage because JAL was admitted to insolvency while consummation was pending, the statement said.

Following approval of the Adani Group's resolution plan for JAL under the Insolvency and Bankruptcy Code, Dalmia said it sought consideration of the earlier agreement to resolve pending disputes.

The fresh business transfer agreement was executed to preserve the cement undertakings, restart economic activity and settle disputes related to ongoing legal proceedings, a pending arbitral award and the earlier framework agreement.

The acquisition marks a strategic fit that gives the company a head start in high-potential central markets, Puneet Dalmia, managing director and CEO of Dalmia Bharat, said in the statement.

The expansion potential of the assets and their proximity to Dalmia's captive mines could help create a future capacity hub, while familiarity from the earlier tolling arrangement should support faster capacity ramp-up and quicker market penetration, Dalmia added.

Meanwhile, the company's ongoing expansion projects at Belgaum, Pune and Kadapa are expected to raise cement capacity further to 66.7 million mt/year by Q2-Q3 FY28, the filing said.

Platts, part of S&P Global Energy, assessed Clinker FOB Turkey EU Grade Premium vs CLX at $2/mt May 21, unchanged week over week.