Ambuja Cements Ltd (ACL) of India has bought an 85 percent stake in Nepal's Dang Cement Industries for about Rs 315.15 million. According to Reuters, the company is in the process of acquiring another 5 percent stake for Rs 18.64 million.

With the acquisition, Dang Cement Industries has become an Ambuja subsidiary.

ACL's buying a majority stake in Dang Cement is understandable as the company is planning to expand its production capacity. Dang Cement holds a limestone mining lease in Dang. ACL, one of the leading cement manufacturers in India, commenced cement production in 1986. Global cement major Holcim acquired management control of ACL in 2006. Holcim currently holds more than 50 percent of ACL. ACL currently has a production capacity of 25 million tons per annum (mtpa) and is in the process of taking it to 27 mtpa within this year.

The ACL-Dang deal is the first ever instance of foreign investment in the cement industry in Nepal. Of late, more companies have been setting up cement factories with limestone quarries as the government has increased the customs duty on the import of clinker.

Most Nepali cement manufacturers have been importing clinker from India to produce cement. Nepal imports 3 million tons, around 80 percent of the clinker used in the country, from India annually.

As of now, there are 40 cement factories in the country with seven having their own limestone quarry. Almost all the leading business houses of Nepal have jumped into cement production. Recently, the Chaudhary Group has registered CG Cement Industry at the Department of Industry.

The group is planning to establish a cement factory in Dumkibas, Nawalparasi with an investment of Rs 800 million.

source: The Kathmandu Post(2011),"India’s Ambuja acquires 85pc of Dang Cement", The Kathmandu Post, 8 June 2011