Rs 1,800 Merger & Acquision Deal: This Cement Manufacturing Company Gets Approval for M&A Deal to Boost Capacity to 31 MMTPA Across Gujarat Facilities
In FY24, the company posted a revenue of Rs 10,732.89 crore, registering a 1.39 per cent growth compared to Rs 10,586.17 crore in FY23. The net profit for the year stood at Rs 147.37 crore, up 829.19 per cent from Rs 15.86 crore in the previous financial year.
The Hon’ble National Company Law Tribunal (NCLT), Mumbai Bench, has issued an order approving the Resolution Plan submitted by Nuvoco Vistas Corp. Limited for the acquisition of Vadraj Cement Limited (VCL) in the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 (IBC). The Resolution Plan includes an upfront payment of Rs 1,800 crores. Nuvoco intends to fund the transaction without a significant rise in its consolidated debt levels. The acquisition will be undertaken through Vanya Corporation Private Limited (Vanya), a wholly owned subsidiary of Nuvoco Vistas Corp. Ltd. Subsequently, Vanya will be merged with VCL as outlined in the Resolution Plan.
After the merger, VCL will become the company's wholly owned subsidiary. Nuvoco will additionally invest approx. Rs 1,000 to Rs 1,200 crores to operationalise the assets, which have remained suspended for almost the last 7 years. A phased investment will be spread over 15-18 months from the date of actual handover by the Committee of Creditors towards getting the facility running and driving operational improvements across the VCL plants. The estimated target date to commence production is around Q3 FY27.
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VCL’s facilities include a 3.5 MMTPA (~10,000 TPD) clinker unit in Kutch, Gujarat, and a 6 MMTPA grinding unit in Surat, Gujarat. Additionally, VCL owns high-quality limestone reserves, ensuring a consistent and sustainable supply of raw materials for future production. The captive jetty in Kutch further enhances logistical efficiency. With this acquisition, Nuvoco’s total cement production capacity is set to increase to approx. 31 MMTPA, consolidating its position as the fifth-largest cement group in India for long-term.
Commenting on the approval, Mr. Jayakumar Krishnaswamy, Managing Director, Nuvoco Vistas Corp. Ltd., stated, “This deal consolidates our position as the fifth-largest player in the Indian Cement Industry. This will drive logistics optimisation, streamline operations, and improve competitiveness, providing the Company with better market access and a strengthened supply chain across key regions and enable us to deliver greater value and superior service to our customers in a competitive and dynamic business landscape.
In the Quarterly Results of December 2024, the company reported a revenue of Rs 2,409.36 crore, reflecting a YoY decline of 0.48 per cent compared to Rs 2,420.98 crore in December 2023. The operating profit stood at Rs 258.25 crore, marking a 37.08 per cent decline from Rs 410.41 crore in the same quarter last year. The profit after tax (PAT) stood at a loss of Rs 61.37 crore compared to a profit of Rs 31.03 crore in December 2023, registering a YoY decline of 297.78 per cent.
In FY24, the company posted a revenue of Rs 10,732.89 crore, registering a 1.39 per cent growth compared to Rs 10,586.17 crore in FY23. The net profit for the year stood at Rs 147.37 crore, up 829.19 per cent from Rs 15.86 crore in the previous financial year.
The current price of the stock is Rs 319.05 and the market capitalization stands at Rs 11,395.07 crore. The company has ROCE of 5.52 per cent and ROE of 1.65 per cent.
Investors must keep this Small-Cap stock on their radar.
Disclaimer: The article is for informational purposes only and not investment advice.