Growing Investor Interest in Distressed Cement Companies
In recent months, several strategic investors and buyers have been actively exploring opportunities within the cement manufacturing sector, particularly targeting companies undergoing the corporate insolvency resolution process mandated by the Insolvency and Bankruptcy Code.
High-Profile Targets
Among the notable assets attracting attention is the cement division of Jaiprakash Associates Ltd (JAL). This company operates four production plants located in North and Central India, boasting a combined capacity of approximately 6 million tonnes per annum. The facilities are situated in Rewa, Madhya Pradesh, and Chunar, Churk, and Sadwa in Uttar Pradesh.
Expressions of Interest
Bhuvan Madan, the resolution professional overseeing JAL, has reported that several prominent companies, including Adani Enterprises, Dalmia Cement (Bharat) Ltd, Vedanta Ltd, and Rashmi Metaliks Ltd, have shown strong interest in JAL’s assets. Notably, JAL also possesses significant holdings in power, hospitality, and real estate sectors, leading to interest from around two dozen bidders for various assets.
Wider Sector Activity
Market observers are also closely monitoring insolvency proceedings involving other companies such as Jammu & Kashmir Cements, Kirtiman Cements & Packaging, and Dhara Cements in Gujarat. Karishma Dodeja, a partner at Trilegal, noted that the cement sector is experiencing considerable activity, driven by consolidation trends initiated by major players like Ultratech and the Adani Group.
Dodeja remarked, “This wave of consolidation is amplified by the government’s strong infrastructure initiatives and the mounting debt burden among smaller firms, which makes them appealing acquisition targets.”
Recent Developments
In a noteworthy transaction, the Mumbai bench of the National Company Law Tribunal (NCLT) approved the acquisition of Vadraj Cement by Nuvoco Vistas Corp, owned by the Nirma Group. Additionally, Virgo Cements, which faced ₹74 crore in admitted claims, successfully concluded its resolution after lenders, including PNB and Indian Bank, unanimously supported the bid from PRAG India.
Drivers of Interest
Legal experts identify pricing, geographic location, and operational synergies as key factors fueling the surge in deals within the cement sector. Many companies are being offered at discounted rates, while medium and small players often operate in less saturated markets with significant growth potential. For larger corporations, acquiring these smaller entities can yield substantial cost optimization benefits.
Nishith Dhruva, managing partner of MDP Legal, stated that cement plants that function as going concerns are particularly attractive to strategic investors, especially those looking to expand their capacity.
