JK Lakshmi Cement Ltd.'s board has approved a scheme of arrangement to merge three of its subsidiaries: Udaipur Cement Works Ltd., Hansdeep Industries and Trading Co. and Hidrive Developers and Industries Pvt., the company informed exchanges on July 31.
The approved appointment date for the merger stands at April 1, 2024.
Details Of The Scheme
The proposed scheme will have the following considerations:
Merger Of Udaipur Cement Works: Shareholders of UCWL will get four shares of JK Lakshmi Cement for every 100 shares they hold in UCWL.
Merger Of Hansdeep Industries And Hidrive Developers: No shares will be issued for these mergers as JKLC already owns all shares of both companies.
Post the merger, JK Lakshmi Cement will effectively have two subsidiaries. The company will have 100% stake in Hansdeep Industries' subsidiary Ramkanta Properties and will continue holding 85% stake in Agrani Cements.
The Scheme of Arrangement is expected to be effective from the second half of the calendar year.
Capacity Details Of Companies Involved
Parent company JK Lakshmi Cement has manufacturing facilities as well as immovable properties located in the states of Rajasthan, Chhattisgarh, Gujarat, Haryana, and Odisha. The company has two integrated plants in Rajasthan and Chhattisgarh and split grinding units in states of Haryana, Gujarat and Odisha.
JK Lakshmi's total capacity stands at 11.7 million tonne and total clinker capacity stands at 7 million tonne, as of Q1 FY25.
Udaipur Cement Works has a single location integrated plant in Rajasthan, with a cement and clinker capacity of 4.7 MT and 3 MT, respectively.
Whereas Hidrive Developers owns an industrial plot adjacent to the Surat Grinding unit. Hansdeep Industries is a preferred bidder for limestone mines at Nagaur, Rajasthan.
Strategic Rationale
The company lists the following factors that led to the company approving the restructuring:
Increased synergical benefits in manufacturing, distribution process and logistics alignment, which would help reduce time to market, thereby benefitting customers.
Presently, the cement assets of the company are fragmented into four entities. The scheme helps consolidate the cement assets into a single business-focused listed entity.
Shareholders of JK Lakshmi Cement to benefit through optimum valuation with the consolidation. Shareholders of Udaipur Cement Works will gain by merging into a much bigger listed player with a higher cement capacity.
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