MUMBAI/CHENNAI: In a strategic move to bolster his position as India’s largest building materials maker, billionaire Kumar Mangalam Birla has struck a deal with N Srinivasan and his family to acquire their cement business for Rs 3,954 crore.
UltraTech Cement, a part of the $65-billion Aditya Birla conglomerate, will acquire about 33% stake in India Cements, valuing the Chennai-based company at Rs 390 a share.This adds to the 23% stake UltraTech purchased in June. Additionally, UltraTech will make an open offer to India Cements‘ public shareholders to acquire an extra 26% stake at the same price in line with India’s takeover norms, raising the total cost for UltraTech to Rs 7,100 crore.
If approved by regulators, this deal will extend UltraTech’s footprint in the highly fragmented and fast-growing southern market, particularly in Tamil Nadu, where it has had limited presence. The scarcity of limestone in Tamil Nadu has restricted UltraTech from setting up new integrated units in the state since acquiring its last unit in Aug 1998.
UltraTech will add India Cements’ 14.5 million tonnes capacity spread across Telangana, Andhra Pradesh, and Rajasthan to its existing 153 million tonnes capacity and take on the company’s 1,855 employees. UltraTech’s only integrated unit in Tamil Nadu has a capacity of 1.4 million tonnes, whereas India Cements has a capacity of 6 million tonnes in the state.
Conglomerate chair Kumar Mangalam Birla said the India Cements opportunity is an “exciting” one as it enables UltraTech to serve the southern market more effectively and also “accelerates our path to 200 plus million tonnes capacity”. UltraTech is up against Ambuja Cements, a part of Gautam Adani’s enterprise, which is gunning for the leading position in the industry. Ambuja has a capacity of 89 million tonnes.
This deal follows Birla’s acquisition of a 23% stake in India Cements from billionaire investor and DMart founder Radhakisan Damani for Rs 1,885 crore at Rs 267 a share. Following this “financial investment,” UltraTech was approached by the promoters of India Cements, who were interested in selling their holding in the company.
Srinivasan joined India Cements after his father and the company’s co-founder passed away in 1968. Currently the vice chairman and MD, Srinivasan, 79, is facing health issues, and his wife and daughter, Rupa Gurunath, are not interested in running India Cements. The trio will step down from the board once the acquisition is complete.
India Cements has faced financial issues in recent quarters, with its offices being searched by the Enforcement Directorate earlier this year in relation to certain foreign exchange transactions. The company has been restructuring its balance sheet to reduce losses, modernize its vintage plants, and meet working capital needs.
UltraTech Cement, a part of the $65-billion Aditya Birla conglomerate, will acquire about 33% stake in India Cements, valuing the Chennai-based company at Rs 390 a share.This adds to the 23% stake UltraTech purchased in June. Additionally, UltraTech will make an open offer to India Cements‘ public shareholders to acquire an extra 26% stake at the same price in line with India’s takeover norms, raising the total cost for UltraTech to Rs 7,100 crore.
If approved by regulators, this deal will extend UltraTech’s footprint in the highly fragmented and fast-growing southern market, particularly in Tamil Nadu, where it has had limited presence. The scarcity of limestone in Tamil Nadu has restricted UltraTech from setting up new integrated units in the state since acquiring its last unit in Aug 1998.
UltraTech will add India Cements’ 14.5 million tonnes capacity spread across Telangana, Andhra Pradesh, and Rajasthan to its existing 153 million tonnes capacity and take on the company’s 1,855 employees. UltraTech’s only integrated unit in Tamil Nadu has a capacity of 1.4 million tonnes, whereas India Cements has a capacity of 6 million tonnes in the state.
Conglomerate chair Kumar Mangalam Birla said the India Cements opportunity is an “exciting” one as it enables UltraTech to serve the southern market more effectively and also “accelerates our path to 200 plus million tonnes capacity”. UltraTech is up against Ambuja Cements, a part of Gautam Adani’s enterprise, which is gunning for the leading position in the industry. Ambuja has a capacity of 89 million tonnes.
This deal follows Birla’s acquisition of a 23% stake in India Cements from billionaire investor and DMart founder Radhakisan Damani for Rs 1,885 crore at Rs 267 a share. Following this “financial investment,” UltraTech was approached by the promoters of India Cements, who were interested in selling their holding in the company.
Srinivasan joined India Cements after his father and the company’s co-founder passed away in 1968. Currently the vice chairman and MD, Srinivasan, 79, is facing health issues, and his wife and daughter, Rupa Gurunath, are not interested in running India Cements. The trio will step down from the board once the acquisition is complete.
India Cements has faced financial issues in recent quarters, with its offices being searched by the Enforcement Directorate earlier this year in relation to certain foreign exchange transactions. The company has been restructuring its balance sheet to reduce losses, modernize its vintage plants, and meet working capital needs.
