In a significant development in the Indian cement industry, Shree Digvijay Cement Company Limited is set to undergo a major ownership change. True North Fund VI LLP, the current promoter, has agreed to sell up to 50.10% of the company's equity to India Resurgence Fund entities, potentially reshaping the competitive landscape in the sector.

Key Highlights of the Transaction

• Stake Sale: True North Fund VI LLP has entered into a share purchase agreement to sell up to 7,42,71,009 shares, representing 50.10% of Shree Digvijay Cement's equity, to India Resurgence Fund entities.
• Minimum Acquisition: The deal ensures a minimum acquisition of 45.01% of the share capital by the India Resurgence Fund entities.
• Regulatory Approval: The transaction is subject to regulatory approvals, including clearance from the Competition Commission of India.
• Mandatory Open Offer: The stake sale will trigger a mandatory open offer to public shareholders, as required by SEBI regulations.

Strategic Distribution Agreement

Alongside the ownership change, Shree Digvijay Cement's board has approved a significant distribution agreement with Hi-Bond Cement (India) Private Limited. Key aspects of this agreement include:

• Exclusive Rights: Shree Digvijay Cement will gain exclusive 10-year cement distribution rights from Hi-Bond Cement.
• Value: The distribution agreement is valued at approximately INR 600.00 crore annually.
• Refundable Deposit: Shree Digvijay Cement will provide a refundable deposit of up to INR 400.00 crore to Hi-Bond Cement.
• Board Representation: Shree Digvijay Cement will gain the right to nominate one director on Hi-Bond Cement's board.

Options Agreement

An options agreement has also been approved, giving Shree Digvijay Cement the potential to acquire 100% of Hi-Bond Cement in the future.

Impact and Future Outlook

Upon completion of these transactions:

1. India Resurgence Fund will acquire control of Shree Digvijay Cement.
2. The board of Shree Digvijay Cement will be reconstituted.
3. India Resurgence Fund entities will be reclassified as promoters of the company.

This deal marks a significant shift in the ownership and strategic direction of Shree Digvijay Cement. The partnership with Hi-Bond Cement through the distribution agreement could potentially enhance Shree Digvijay's market presence and distribution capabilities.

Investors and industry observers will be keenly watching how these developments unfold, particularly in terms of potential synergies, market strategies, and the impact on Shree Digvijay Cement's competitive position in the Indian cement market.

As the cement industry continues to evolve, this transaction could signal further consolidation and strategic realignments in the sector. Stakeholders will be eager to see how the new ownership and partnerships influence Shree Digvijay Cement's growth trajectory and market performance in the coming years.

Shree Digvijay Cement Company Limited has announced a series of significant transactions that could reshape the company's ownership structure and business operations. The cement manufacturer's board has approved key agreements that include a major stake sale and new distribution arrangements.

Stake Sale Transaction

True North Fund VI LLP, the current promoter of Shree Digvijay Cement Company, has entered into a Share Purchase Agreement (SPA) with India Resurgence Fund (IRF) entities. The agreement involves the sale of up to 7,42,71,009 equity shares, representing 50.10% of the company, to IRF entities. This transaction is subject to regulatory approvals, including clearance from the Competition Commission of India.

Mandatory Open Offer

As a result of this substantial acquisition, the IRF entities will be required to make a mandatory tender offer to the public shareholders of Shree Digvijay Cement Company. This open offer will be made in accordance with SEBI regulations governing substantial acquisitions of shares and takeovers.

Distribution Agreement with Hi-Bond Cement

In a parallel development, Shree Digvijay Cement Company has entered into a brand usage, supply, and distributorship agreement with Hi-Bond Cement (India) Private Limited. This agreement grants Shree Digvijay Cement Company exclusive long-term distribution rights for cement products manufactured by Hi-Bond Cement. The deal is valued at approximately INR 600.00 crore per annum, based on Hi-Bond Cement's annual turnover of INR 670.00 crore for the financial year ending March 31, 2024.

Key terms of the distribution agreement include:

• A 10-year exclusive distribution period
• A refundable deposit of up to INR 400.00 crore to be provided by Shree Digvijay Cement Company to Hi-Bond Cement
• The right for Shree Digvijay Cement Company to nominate one non-retiring executive director on Hi-Bond Cement's board

Options Agreement

Shree Digvijay Cement Company has also entered into an options agreement with Hi-Bond Cement's shareholders. This agreement provides Shree Digvijay Cement Company with a call option to purchase 100% of Hi-Bond Cement's equity shares within eight years from the effective date of the agreement.

Company Agreement with IRF Entities

To govern the inter-se rights and obligations related to these transactions, Shree Digvijay Cement Company has executed a Company Agreement with the IRF entities. This agreement outlines the procedures for obtaining regulatory approvals and the subsequent changes in the company's management structure.

Impact on Management and Control

Upon completion of these transactions:

• The IRF entities will acquire control of Shree Digvijay Cement Company
• True North Fund VI LLP will be reclassified as a public shareholder
• The board of Shree Digvijay Cement Company will be reconstituted, with IRF entities appointing one nominee director
• IRF entities will be classified as 'promoters' of Shree Digvijay Cement Company

These strategic moves signify a major shift in Shree Digvijay Cement Company's corporate structure and business strategy. The transactions are expected to have far-reaching implications for the company's market position and operational capabilities in the cement industry.

Investors and industry observers will be closely watching the implementation of these agreements and their impact on Shree Digvijay Cement Company's future performance and market standing.