Shiva Cement to Acquire 1.0 MTPA Grinding Unit for ₹380 Crore

Shiva Cement Limited (SCL) has announced in a stock exchange filing that its Board of Directors, following the Audit Committee’s recommendations, has approved a significant business development plan. This plan involves the establishment of a new cement grinding unit with a capacity of 1.0 million tons per annum (MTPA) at Bhushan Power and Steel Limited’s (BPSL) premises located in Sambalpur, Odisha.

The decision, made during the Board’s meeting on July 25, 2024, is contingent upon several conditions, including shareholder approval, necessary consents, and regulatory permissions.

The transaction entails SCL setting up this new unit with BPSL’s assistance, with an option for SCL to eventually acquire the unit along with the rights to utilise the relevant portions of the land where the unit will be constructed. The total consideration for this acquisition is capped at ₹380 crore. This amount may include advance payments to BPSL to facilitate the establishment of the unit.

BPSL, primarily engaged in the steel industry, will oversee the construction of the grinding unit, which will then be transferred to SCL. The move is part of SCL’s strategic plan to enhance its production capabilities and align with its long-term growth objectives.

The approval process will require several additional steps. Firstly, SCL needs to obtain authorisation from the Odisha Industrial Infrastructure Development Corporation (IDCO) to use the specific land portions for the cement unit. Additionally, regulatory approvals are required for the transfer of relevant licenses and registrations under environmental laws from BPSL to SCL.

The project is expected to be finalised by September 30, 2025, provided that all necessary governmental and regulatory approvals are secured and any agreed-upon conditions precedent are met. The successful completion of this transaction will significantly contribute to SCL’s expansion and operational efficiency, underscoring its commitment to growth and development within the cement industry.

Overall, this proposed acquisition aligns with Shiva Cement’s strategic vision and is poised to strengthen its position in the market by enhancing its production capacity and operational infrastructure.

On July 26, 2024, the share price of Shiva Cement Ltd opened at ₹49.40, touching the day’s high at ₹53.45, as of 10:18 AM on the BSE.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.