In a pivotal move for the Indian cement industry, UltraTech Cement Limited has announced its decision to purchase a substantial 32.72% equity stake held by promoters and their associates in India Cements Limited. This acquisition, pending regulatory approvals, positions UltraTech as a major player in the South Indian cement market.

UltraTech Cement’s Strategic Investment

On July 28, 2024, UltraTech Cement’s Board of Directors approved the purchase of 6,81,20,424 equity shares, representing 21.98% of India Cements Limited’s equity, from EWS Finance & Investments Private Limited, Srinivasan N, Chitra Srinivasan, Rupa Gurunath, and S.K. Asokh Baalaje. This transaction will cost Rs. 2,656.70 crore, with each share priced at Rs. 390. A separate agreement will see the acquisition of an additional 1,99,54,024 shares, representing 6.44% of the equity, from Rupa Gurunath, Trustee of Security Services Trust and Financial Service Trust, for Rs. 778.21 crore. Furthermore, UltraTech will buy 1,33,16,783 shares from Sri Saradha Logistics Private Limited for Rs. 519.35 crore.

The Impact of the Acquisition

India Cements, with a total capacity of 14.45 million tonnes per annum (MTPA), has substantial operations in Tamil Nadu and Rajasthan. The acquisition will strengthen UltraTech’s foothold in the Southern market and accelerate its goal of reaching over 200 MTPA capacity. Following this acquisition, UltraTech will trigger a mandatory open offer to purchase up to 8,05,73,273 additional shares, constituting 26% of India Cements’ equity, at the same price of Rs. 390 per share.

Regulatory and Financial Implications

The transaction is subject to approvals from regulatory bodies including the Competition Commission of India and the Securities and Exchange Board of India (SEBI). Kumar Mangalam Birla, Chairman of the Aditya Birla Group, emphasized that this investment aligns with UltraTech’s strategy to drive economic growth and infrastructure development in India. He highlighted that these investments not only bolster the company’s market position but also contribute significantly to national infrastructure projects.

Looking Ahead

Once finalized, this acquisition will position UltraTech Cement as a leading force in the Indian cement industry, enhancing its market share and operational capacity. The company is expected to benefit from increased market penetration and the strengthened regional presence in South India.

  Aditya Birla Group, Competition Commission of India, India Cements Limited, Kumar Mangalam Birla, Rajasthan, Securities and Exchange Board of India, Srinivasan N, Tamil Nadu, UltraTech Cement Limited