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Shree Cement to buy 93% stake in UAE-based Union Cement for 305 Million Dollars

Shree Cement Ltd on Thursday said it had consented to acquire a 92.83% stake in Union Cement Co. PSC, a United Arab Emirates-based firm, for an endeavor estimation of $305.24 million (Rs1,945 crore).

Shree Cement has the alternative to take full control of the organization’s offers, CFO Subhash Jajoo said.

Union Cement, established in 1972, has a yearly generation limit of four million tons and operations in the Emirate of Ras Al-Khaimah.

As its plant is found near the Saqr port, the organization fares to different nations in the Gulf locale and East Africa, Shree Cement said in an administrative recording.

Half of the unit’s yield is expended locally and the other half traded.

This will be Shree Cement’s first wander outside India and its greatest obtaining ever. Locally, the organization produces 29.3 million tons of cement a year.

The exchange is relied upon to be finished up in nine months, subject to endorsement from UAE administrative bodies. Jajoo said Union Cement, which produces 3.3 million tons of clinker—the key element for cement—was accessible at an “aggressive cost” of $75 per ton of concrete yield. “Our rivals have obtained resources at higher costs of $110-120 for every ton,” he included.

Shree Cement has a money save of around Rs4,000 crore, as per Jajoo.

Be that as it may, the organization hasn’t chosen on the off chance that it will pay for the procurement altogether from its own coffers, he included.

For the following monetary year, Shree Cement has planned for capital consumption of Rs2,500 crore, far beyond the UAE obtaining, said Jajoo. The vast majority of the sum will be furrowed into existing units in India.

The organization is hoping to scale up its creation limit in India to 40 million tons in a time span of two years, he included.

Union Cement has a predictable reputation, Shree Cement said in an announcement. In 2016, it detailed $153.4 million in income and a working benefit of $33.7 million, which converts into a highly leveraged operating margin of 21.9%.

In the nine months till the finish of September, the organization’s operating profit was at $25.97 million on revenue of $120.27 million.

Shree Cement’s stock rose 0.19% to Rs 19,511 on BSE in a flat market. The declaration of the procurement was made after securities exchanges was closed for the day. On Thursday, Shree Cement detailed a 41.5% increment in December quarter net benefit from a year sooner because of an extension in margins. Net profit for the quarter was Rs333.33 crore, contrasted and Rs235.43 crore a year sooner. Income was Rs2,383.53 crore, up 7% from a year sooner.

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