Consolidating its number one position in the cement sector, UltraTech Cement Ltd, owned by the Aditya Birla group, has acquired 32.72 per cent stake of N Srinivasan and associates in India Cements for Rs 3,954 crore. With this sell-out, Srinivasan will exit from the company set up in 1946.
As the Birlas will shell out Rs 390 per share for the acquisition, it will trigger a mandatory open offer for another 20 per cent stake in the company from the public at Rs 390 per share. The open offer, which will cost around Rs 2,400 crore, will be done subsequently after obtaining all regulatory approvals, the company said on Sunday.
The Birlas will now have a stake of 55.49 per cent in India Cements.
India Cements is currently controlled by the N Srinivasan and family. Srinivasan was earlier Chairman of the International Cricket Council (ICC) and President of the Board of Control for Cricket in India (BCCI). While Srinivasan is the Vice-chairman and MD of India Cements, his daughter Rupa Gurunath is an Executive Director of the company and his wife Chitra Srinivasan is a non-executive non-independent director on the board. They are likely to quit from these positions when the takeover comes into effect.
On June 27 this year, UltraTech Cement has acquired a 22.77 per cent stake in India Cements at a price of Rs 268 per share, triggering speculation about a takeover of the South India-based cement major. The move marked a further intensification of the battle for control of India’s cement market, which was dominated for long by Kumar Mangalam Birla’s company until the Adani Group entered the sector in 2022 and has since become the country’s second biggest player.
When the Birlas bought the 22.77 per cent stake in India Cements in June this year, it said the stake purchase was only a “financial investment”. “Post this financial investment, the promoter group approached us as they wanted to sell their holding in the company, and we found it appropriate to acquire their stake in the company,” UltraTech said in a statement after the board meeting.
If the Birlas get the full 20 per cent subscription in the open offer, their stake will increase to 75.49 per cent in India Cements.
India Cements has a total capacity of 14.45 mtpa of grey cement. Of this, 12.95 mtpa is in the South (particularly Tamil Nadu) and 1.5 mtpa is in Rajasthan. The transaction is subject to regulatory approvals.
India Cements shares rose 3.65 per cent to Rs 374.60 on the BSE on Friday. It has a market capitalisation of Rs 11,608 crore. UltraTech shares gained 2 per cent at Rs 11,679.25 on Friday.
Kumar Mangalam Birla, Chairman, Aditya Birla Group, said, “UltraTech Cement’s investments over the years, both organic and inorganic, have been designed to propel India to become a building solutions champion globally. Every investment in a core sector like cement accelerates economic activity and drives progress.”
“These investments have also facilitated India’s nationwide infrastructure upgrade, powering our country’s growing need for housing, roads, and other vital infrastructure. This, in turn, has had tremendous impact on the lives and aspirations of people,” he said.
“The India Cements opportunity is an exciting one as it enables UltraTech to serve the Southern markets more effectively and also accelerates our path to 200 plus MTPA capacity,” Birla said.
On June 13, Adani Group owned Ambuja Cements said it has signed a binding agreement for the acquisition of Hyderabad-based Penna Cement Industries Ltd (PCIL) at an enterprise value of Rs 10,422 crore. Ambuja Cements will acquire 100 per cent shares of PCIL from its existing promoter group P Pratap Reddy and family.
The spate of acquisitions by the Birlas and Adani is expected to intensify the battle for market share in the cement sector in the coming days.
Currently, UltraTech has a consolidated capacity of 152.7 million tonnes per annum of grey cement. It has 24 integrated manufacturing units, 33 grinding units, one Clinkerisation unit and 8 bulk packaging terminals.
India Cements made a loss of Rs 202 crore on a turnover of Rs 4,942 crore in FY2024.
UltraTech had announced the acquisition of Kesoram Industries’ cement assets for Rs 7,600 crore last year. UltraTech recently said its expansion programme is progressing as per schedule. Work on the second phase of 22.6 mtpa capacity announced in June, 2022, is under progress with capacities commissioned across several locations, it said.
The Adani group has been expanding its footprint in the cement sector. Gujarat Ambuja, with its subsidiaries ACC Ltd. and Sanghi Industries Ltd, has taken the Adani Group’s cement capacity to 78.9 MTPA, with 18 integrated cement manufacturing plants and 19 cement grinding units across the country.
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