Shree Cement was in talks with JP Associates with respect to this deal for a month, HM Bangur, managing director of Shree Cements.
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Shree Cement will acquire 1.50 million tonnes (mt) cement grinding unit of Jaiprakash Associates , at Panipat, Haryana, for Rs 360 crore.
Speaking to CNBC-TV18 about the deal, HM Bangur, managing director of Shree Cements said that the company has signed an agreement for the deal and due diligence is currently underway. He expects the due diligence process to be completed in two weeks.
“Shortage of grinding unit led to the decision for this acquisition. We expect the Indian cement market to grow at 8 percent. To prepare for growth in cement industry, we have decided on this acquisition,” he added.
The Jaypee group has been a debt-reduction spree and is selling most of its cement assets to reduce its debt of Rs 60,000 crore. In September, the company offloaded its Gujarat cement plant to UltraTech Cement for Rs 3,800 crore.
Below is the verbatim transcript of HM Bangur’s interview with CNBC-TV18’s Menaka Doshi and Anuj Singhal
Menaka: Can you talk us through the details of this acquisition that you are making?
A: The details are yet to materialise. The only thing is that we have signed a agreement and subject due to diligence we will like to acquire and they will like to sell the unit. The due diligence process is on and only after that the details will come up.
Shree Cements stock price
On August 25, 2014, Shree Cements closed at Rs 7862.00, down Rs 177.5, or 2.21 percent. The 52-week high of the share was Rs 8160.00 and the 52-week low was Rs 3412.65.
The company’s trailing 12-month (TTM) EPS was at Rs 228.07 per share as per the quarter ended March 2014. The stock’s price-to-earnings (P/E) ratio was 34.47. The latest book value of the company is Rs 1103.32 per share. At current value, the price-to-book value of the company is 7.13.