Cement companies expecting revival in demand in current fiscal. Pictured: A labourer carries a sack of cement inside a shop in Agartala, capital of India's northeastern state of Tripura Jun. 22, 2012.Reuters File

Major cement companies, expecting an amendment to the Mines and Minerals Development and Regulation (MMDR) act 2015, have asked the government to allow the transfer of limestone mines automatically to the buyers in case of mergers and acquisitions (M&As), the Business Standard reported. 

Under the present norms of the act, the automatic transfer of limestone mining rights to the new owner is not allowed if the acquisition is partial, or is not 100 percent. 

Aditya Birla group-owned UltraTech Cement recently acquired 22.4 million tonnes per annum (mtpa) cement capacity of Jaypee's cement business in a deal estimated to be about Rs 17,000 crore. Since Jaypee has a total cement capacity of 27 mtpa. In case the amendment is not made to the MMDR act, for the UltraTech-Jaypee deal to proceed, UltraTech would need to acquire the 100 percent stake in an entity separately created by Jaypee. 

In this case, Jaypee would carve out a residual company that would have the cement manufacturing capacity of 22.4 mmta, the same to be acquired by UltraTech. Through this route, the mining rights for those limestone mines under acquisition would get transferred to the new buyer. 

According to reports, UltraTech earlier planned to buy Jaypee's cement units in Madhya Pradesh, but the Bombay High Court ruling, stating the MMDR act, prevented the Rs 5,500 crore deal from being finalised since it was considered a "partial sale," the Economic Times reports.

Transfer of mining leases, not obtained via auction, would help financial institutions and banks to liquidate "stressed assets" when a company is mortgaged. The amendment to the MMDR act would allow M&As to conduct business with ease. It would also increase profitability and decrease costs of the debt-ridden companies. 

Citing the same provision of the act, Lafarge earlier did not sell its Eastern India assets to Birla Corp, but is reportedly planning to sell its entire India assets, an earlier Business Standard report stated. 

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