Aditya Birla Group flagship company UltraTech Cement on Thursday announced the acquisition of a 23 per cent stake in former BCCI president N Srinivasan-led India Cements Ltd for over Rs 1,900 crore as it looks to shore up capacity to compete against Adani Group.
UltraTech Cement has acquired Damani-group's stake in India Cements Ltd (ICL) through two block deals, according to a statement and stock exchange data.
ICL promoters, however, will continue to be the largest shareholder with a 28.42 per cent stake.
As per the block deal data on the BSE, UltraTech Cement bought a total of 7,05,64,656, amounting to a 22.77 per cent stake in India Cements.
The shares were purchased in the price range of Rs 265.05-283.3, taking the combined transaction value to Rs 1,889.27 crore.
The sellers are Gopikishan Shivkishan Damani, Kiran Devi Damani, Radhakishan Shivkishan Damani and Shrikanta Devi Damani, as per the data.
RK Damani's Derive Investments and Derive Trading and Resorts Pvt Ltd also offloaded the shares of Chennai-based India Cements. UltraTech will become the second largest shareholder in the ICL, which has a manufacturing capacity of 16 MTPA, including 1.5 MTPA from its subsidiary Trinetra Cement Ltd.
The deal comes within two weeks after Adani Group, the second largest cement maker 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.
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 8 bulk packaging terminals.
Describing the deal as a "financial investment", UltraTech said it will acquire up to 7.06 crores of equity shares of India Cements.
As part of the transaction, UltraTech Cement has acquired 6,02,48,983 equity shares of India Cements, aggregating to a 19.44 per cent stake at a price of up to Rs 267 per share, the Aditya Birla Group flagship firm said in a regulatory filing.
The value of the first transaction at the share price of Rs 267 per share is pegged at Rs 1,608.64 crore.
The board of directors at a separate meeting approved acquiring up to 3.4 per cent equity shares at a price up to Rs 285 per share, it added. The value of the second transaction is Rs 295 crore at a price of up to Rs 285 per share.
Earlier in the day, UltraTech Cement, in a regulatory filing, said its board at a meeting held on Thursday approved "making a financial investment to purchase up to 7.06 crores equity shares of India Cements Ltd".
"This non-controlling financial investment constitutes around 23 per cent of the equity share capital of India Cements," UltraTech Cement said.
For the quarter ending March 31, 2024, India Cements promoters hold 28.42 per cent share, in which N Srinivasan, Vice Chairman and Managing Director, holds 0.36 per cent of the company. EWS Finance & Investments, a promoter group firm, has a 21.56 per cent stake in the company.
UltraTech Cement, with an installed capacity of 152.7 million tonnes per annum (MTPA) of grey cement, is in expansion mode. On April 20, it 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 of 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 said in a statement in April this year.
UltraTech Cement, in April this year, had announced a capex of Rs 32,400 crore (nearly USD 4 billion) over the next three years.
Meanwhile, India Cements' revenue from operations for the financial year ended March 31, 2024, stood at Rs 5,112.24 crore. It has also reported a 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 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.
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.
UltraTech Cement's revenue from operation was Rs 70,908.14 crore in FY 2023-24.
The Aditya Birla Group firm is followed by billionaire Gautam Adani-owned Ambuja Cement in the cement industry, which, along with its subsidiaries like ACC and 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 on Thursday settled at Rs 11,714.80, higher by 5.07 per cent on the BSE, while shares of India Cements settled at Rs 293.15 apiece, up 11.49 per cent.
