Aditya Birla Group cements Ultratech Cement with India Cements acquisition.
UltraTech To Buy Srinivasan Stake In India Cements.
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.
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.
India Cements was founded in 1946 by entrepreneur SNN Sankaralinga Iyer and banker T S Narayanaswami, a year before India became an independent country.
Shri Iyer discovered limestone reserves in Tirunelveli, leading to the launch of a factory under the Sankar cement brand. The business relationship turned into a family relation after Narayanaswami’s son, Srinivasan, married Iyer’s granddaughter, Chitra.
Post-acquisition, sources indicate that Srinivasan, the former president of India’s cricketing body BCCI, and his family will focus on cricket. They own the Indian Premier League (IPL) cricket team Chennai Super Kings (CSK), which was established as a division of India Cements in 2008. CSK, one of the most successful franchises, has won five IPL titles so far.
