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Good luck of the Irish

A little-known cement maker from AP strikes a big deal.

     Print Edition: April 20, 2008

A 10-fold growth in 10 years is enough to attract all kinds of attention—even that of the acquisitive kind. The promoters of My Home Industries Ltd (MHIL), a Hyderabad-based cement company, have always shunned the limelight, but the company’s financial performance has been good enough to be noticed by CRH Plc, a well-known maker and distributor of building materials from Ireland, with operations in 32 countries. CRH will pick up a 50 per cent stake in MHIL for m290 million (Rs 1,827 crore), making it one of the biggest acquisitions of cement equity in India.

“We need this investment and the skills of a professional company like CRH to go beyond being a South India player,” says J. Rameswar Rao, 52, Promoter, My Home Group, and Chairman & MD, MHIL, who made a foray into construction 20 years ago. In 1997, he set up MHIL, which closed 2006-07 with a turnover of Rs 500 crore and a profit after tax of Rs 90.97 crore.

According to Rao, the company will close 2007-08 with Rs 900 crore in turnover, as new capacities kick in. The group, which also has a presence in construction and power, will close 2007-08 with sales of over Rs 1,200 crore (the group is now entering the power sector, for which a separate company, My Home Power, has been set up).

Following the deal, in a media release put out last fortnight, Liam O’Mahony, Chief Executive, CRH, said: “MHIL is one of the most modern cement producers in India with excellent reserves and a strong management team, and is a market leader in the dynamic Andhra Pradesh market. As a first investment in India, we are delighted to be associated with such a strong company and look forward to developing the business with our partner as the Indian economy expands.”

MHIL’s current annual cement production capacity is 3.2 million tonnes, which will increase to 4.2 million tonnes in early 2009. The valuation, which according to Rao is among the best and in tune with the industry trends, is based on 4.2 million tonnes. He may be right.

The last big cement deal took place in December 2007 when A.V. Birla company Grasim Industries announced the sale of its entire equity stake in Shree Digvijay Cement Company Ltd (SDCCL) to Cimpor of Portugal for Rs 322 crore. SDCCL has a capacity of 1.07 million tonnes per annum; for the year ended March 31, 2007, it reported a turnover of Rs 260 crore and net profit of Rs 54 crore.

Both partners will have equal board and management representation once the transaction is completed in the second quarter of 2008. At the moment, MHIL’s operations consist of three units in Mellacheruvu village in central Andhra Pradesh with a separate grinding plant under construction near Visakhapatnam.

E. Kumar Sharma

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