NEW DELHI: Kolkata-based diversified conglomerate Emami Group has agreed to sell its cement unit to Nuvoco Vistas Corporation Ltd -- a subsidiary of Nirma Group -- in an effort to pare debt. In a regulatory filing, the group on Thursday said it has entered into a binding agreement with Nuvoco Vistas for the sale of Emami Cement Limited (ECL) for an enterprise value of Rs. 5,500 crore. The transaction is subject to approval from the Competition Commission and is expected to be completed in the next 3-4 months, the company said.

Emami Cement operates one integrated cement plant in Risdah, Chhattisgarh; and grinding units in Bihar, West Bengal and Odisha with a total installed capacity of 8.3 million tonnes per annum; and with mining leases in Chhattisgarh, Rajasthan and Andhra Pradesh. “We believe this is an important step in our group’s objective of becoming debt-free and with this transaction we will substantially achieve this objective,” said Manish Goenka, director at Emami Group.

Earlier, RS Agarwal and RS Goenka, promoters of Emami Group, had said it aims to become debt-free by May this year. As part of its deleveraging plans, promoters had sold 20 per cent stake in listed flagship fast moving consumer goods company Emami Ltd last year. The promoters also sold a 10 per cent stake in the company for Rs 1,600 crore in February and followed it up with another 10 per cent for Rs 1,230 crore in June to reduce their debt. According to analysts of Investec Securities, the deal will reduce Emani’s debt significantly and will bring down pledged shareholding to 32 per cent compared with 72 per cent before the transaction. Total debt of the company stood at Rs 2,600 crore as of August 2019.

The acquisition will bring Nuvoco's total cement capacity in Eastern, Northern and Western India to 23.5 million tonnes (which includes the ongoing capacity expansion project in its Jojobera plant) and over 60 ready-mix plants. The combined operations will span three facilities in Chhattisgarh, two each in Rajasthan and West Bengal, and one each in Odisha, Bihar, Jharkhand, and Haryana. “Emami Cement will enable us to take our Cement business to the next level and continue to serve our customers with innovative and high-quality products that they trust,” said Hiren Patel, chairman of Nuvoco. Nuvoco’s cement sales will spread across 12 states: Chhattisgarh, Odisha, West Bengal, Bihar, Jharkhand, Rajasthan, Madhya Pradesh, Gujarat, NCR region, Punjab, Uttar Pradesh and Haryana.