Penna Cement files draft papers for $185 mn IPO

Hyderabad-based cement maker Penna Cement Industries Ltd has filed its draft red herring prospectus with the capital markets regulator to float an initial public offering (IPO). The proposed IPO size is Rs 1,550 crore ($185 million at current exchange rates), show documents filed with the Securities and Exchange Board of India (SEBI). The offer comprises a fresh sale of shares worth Rs 1,300 crore besides a secondary market sale of shares worth Rs 250 crore by the promoter entity, PR Cement Holdings Ltd. Penna will join peer Emami Cement Ltd, part of the diversified Emami Group, in going public. EmamiCment filed for an IPO last month and is awaiting SEBI’s approval. Nearly three dozen small and big cement firms are listed on the Indian stock exchanges. Aditya Birla Group firm UltraTech Cement Ltd is India’s largest cement maker by installed capacity as well as by market capitalisation. India’s cement sector has witnessed heightened deal activity owing to consolidation in the space. The sector had been going through a slowdown over the past few years because of oversupply. That may change as incremental demand is likely to outpace incremental supply over the next three years owing to the government’s focus on housing and infrastructure as well as the waning impact of demonetisation, goods and services tax and the Real Estate Regulation Act, ratings firm CRISIL Ltd said in a recent report. UltraTech said in May that it would buy the cement business of Century Textiles & Industries Ltd in a stock deal. The merger would take UltraTech’s cement capacity to 109.9 million tonnes per year. The deal received Competition Commission of India (CCI) clearance in August. In June, UltraTech submitted its revised resolution plan to the National Company Law Tribunal’s Kolkata bench to acquire debt-laden cement firm Binani Cement after getting approval from the latter's committee of creditors.