Shiva Cement Signs ₹380 Crore Contract with BPSL

Shiva Cement Ltd, a subsidiary of JSW Cement Ltd, has entered into a ₹380 crore agreement with Bhushan Power and Steel Ltd (BPSL) for the development of a 1 million tonne per annum (MTPA) cement grinding unit in Sambalpur, Odisha. The agreement was executed on January 22, 2025.

Agreement Details

As per the terms, BPSL will construct, install, and operate the grinding unit on its premises. Once operational and after obtaining regulatory approvals, the unit will be transferred to Shiva Cement along with related assets. The total cost of the transaction, including amounts already paid, is capped at ₹380 crore.

Payments will be made in phases, and Shiva Cement will cover all costs associated with the unit’s development and operations until the transfer is completed.

Background and Approvals

The agreement follows earlier resolutions by Shiva Cement’s board and shareholders in 2024. Shareholders approved the project on September 19, 2024, and a memorandum of understanding (MOU) was signed between the two parties on October 4, 2024. This was later amended on December 11, 2024.

Related-Party Transaction

The transaction is classified as a related-party deal since BPSL is linked to Shiva Cement’s promoter group. However, it is being conducted on an arm’s length basis to make sure of compliance with regulatory requirements.

Transfer Process

BPSL will be responsible for constructing and commissioning the grinding unit as per the agreement. Once operational, the unit will be sold and transferred to Shiva Cement, free of any constraints. Shiva Cement will also retain the right to inspect the progress and operations of the unit during the construction phase.

Market Reaction

On the day of the announcement, shares of Shiva Cement closed at ₹39.32, down by ₹0.20 or 0.51%. Today, the stock is trading at ₹39.20 as of 11:06 AM, showing a 0.31% drop, with a six-month decline of 16.68% and a year-to-date fall of 25.48%.

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