Binani buy doesn’t defy CCI Rules: UltraTech CFO

The Economic Times, Vatsala Gaur, Feb 16, 2018


MUMBAI: UltraTech CementBSE 0.07 %, India’s largest manufacturer of the primary building material, believes that acquiring debt-laden Binani CementBSE 0.06 % in the ongoing spell of industry consolidation would not breach the monopoly watchdog’s threshold norms on market dominance. 


“There is no concern of coming under the scanner of the Competition Commission of India,” Atul Daga, chief financial officer of UltraTechBSE 0.07 % Cement, told ET. Daga said that in Rajasthan, where Binani’s India operations are based, Shree Cement is the largest player with a capacity of 19 MT. Ultra-Tech's installed capacity in the state is 8 MT. In this scenario, even after the possible acquisition of Binani's 6 MT plant in Rajasthan, UltraTech's combined capacity of 14 MT will still be lower than that of the market leader. 



India is the world’s second-largest cement market after China, and is also the second-biggest producer of the commodity that is the world’s least priced manufactured item. High freight costs and concentrated limestone mining locations have made cement a highly regionalised business in India, with market dominance determined and assessed on the basis of regional boundaries. 



India’s capital-intensive cement industry, where growth is typically correlated with the broader rate of economic expansion by a factor of about 1.2, is in its second major spell of consolidation in the past decade and a half. At the vanguard of the list of buyers in this round of consolidation are Nuvoco, UltraTech, and the Dalmia Bharat group. 

The bid deadline for Binani Cement ended on February 12. Along with UltraTech, others who have bid are JSW Cement, a consortium of Dalmia Bharat and Bain Piramal Resurgence Fund, Rakesh Jhunjhunwala and Radhakishan Damani, Heidelberg and True North-Ramco. Ultra-Tech’s Daga also added that with a total of 17 cement players operating in Rajasthan and Gujarat, there is enough competition in the two markets, preventing monopolies. 

In its previous decisions, CCI has looked at a minimum of two states and a maximum of six states that are associated with the plant state in terms of inflow and outflow of cement to decide the relevant market for the acquirer. 





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