UltraTech Cement to acquire 23% in India Cements for around Rs 1,885 cr

To buy 7.06 crore equity shares of India Cements at a price of up to Rs 267 per share

New Delhi: The country’s leading cement maker UltraTech on Thursday said it will acquire a 23 per cent stake in its Chennai-based rival India Cements Ltd, in a deal estimated to be around Rs 1,885 crore.

As part of the transaction, UltraTech Cement will acquire 7.06 crore equity shares of India Cements at a price of up to Rs 267 per share, according to a regulatory filing from the Aditya Birla Group flagship firm.

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The Board of company at its meeting held on Thursday approved “making a financial investment to purchase up to 7.06 crores equity shares of India Cements Ltd,” the filing said.

Calculated on the basis of Rs 267 per share, the transaction value of the acquisition stood at Rs 1,885 crore.

“This non-controlling financial investment constitutes around 23 per cent of the equity share capital of India Cements,” said UltraTech.

UltraTech, with an installed capacity of 152.7 million tonnes per annum (MTPA) of grey cement, is in expansion mode. On April 20 announced the acquisition of a grinding unit from India Cements in Maharashtra for a consideration of Rs 315 crore.

Earlier this week, UltraTech Cement also announced a revision of its offer to acquire 25 per cent in UAE-based RAK Cement Co for White Cement and Construction Materials PSC (RAKWCT).
In the last 12 months, UltraTech has expanded its capacity by 18.7 MTPA.

“The ongoing expansion of 35.5 MTPA is actively being implemented across 16 locations. In addition, the company is in the process of closing the proposed acquisition of Kesoram Cement. This will further augment UltraTech’s grey cement capacity to 198.2 MTPA,” the company had said in a statement in April.

UltraTech in April this year had announced a capex of Rs 32,400 crore (nearly $4 billion) over the next three years.

Meanwhile, India Cements’ revenue from operations for the financial year ended on March 31, 2024 was down 8.84 per cent to Rs 5,112.24 crore. It has also reported widening of loss to Rs 227.34 crore, from Rs 126.89 crore in FY23.

India Cements is monetising some of its non-core assets to improve its liquidity and to meet its capital expenditure plans.

In September 2023, India Cements sold 73.75 acres of land at Kantakapalle and Chinnipalem villages in Vizianagaram district of Andhra Pradesh valued at Rs 70 crore to UltraTech Cement.

In October 2022, India Cements sold its entire shareholding held by it in Springway Mining Pvt Ltd (SMPL), for a consideration of Rs 476.87 crore to JSW Cement.

India Cements has a total Group capacity of 16 MTPA including 1.5 MTPA from its subsidiary, Trinetra Cement Ltd.

UltraTech has a consolidated capacity of 152.7 Million Tonnes Per Annum (MTPA) of grey cement. It has 24 integrated manufacturing units, 33 grinding units, one clinkerisation unit and eight bulk packaging terminals.

Its capacity over the past two decades, “has grown 11x, far outpacing the industry growth of 4x,” according to an earlier statement by the company.

“It took 36 years for the cement business of Aditya Birla Group, to get to a capacity of 100 MTPA. And UltraTech has subsequently added the next 50 mtpa in less than 5 years with an investment of around Rs 32,000 crore,” it said.

In the last AGM in 2023, its chairman Kumar Mangalam Birla had set a target for 200 MTPA, aiming to become one of the largest cement companies in the world.

The Aditya Birla Group firm is followed by billionaire Gautam Adani-owned Ambuja Cement in the cement industry, which along with its subsidiaries as ACC, Sanghi Industries, is sitting at 79 MTPA capacity.

Adani Group also has an ambition to have a capacity of 140 MTPA by 2028 and as part of that, it announced the acquisition of Hyderabad-based Penna Cement at an enterprise value of Rs 10,422 crore this month, which will add 14 MTPA, taking its capacity to 93 MTPA.

Shares of UltraTech Cement were trading at Rs 11440.35, higher by 2.61 per cent on the BSE, while shares of India Cements were trading at Rs 285.80 apiece, up 8.69 per cent on the BSE.