{"id":83214,"date":"2024-06-28T09:37:11","date_gmt":"2024-06-28T09:37:11","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/06\/28\/birlas-ultratech-buys-23-in-india-cements-in-mkt-share-race-with-adani-cos-times-of-india\/"},"modified":"2024-06-28T09:37:12","modified_gmt":"2024-06-28T09:37:12","slug":"birlas-ultratech-buys-23-in-india-cements-in-mkt-share-race-with-adani-cos-times-of-india","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/06\/28\/birlas-ultratech-buys-23-in-india-cements-in-mkt-share-race-with-adani-cos-times-of-india\/","title":{"rendered":"Birla\u2019s UltraTech buys 23% in India Cements in mkt share race with Adani cos – Times of India"},"content":{"rendered":"
\"Birla\u2019s<\/div>


\n<\/p>\n

MUMBAI\/CHENNAI: UltraTech Cement, controlled by Kumar Mangalam Birla, has acquired a 23% stake in India Cements from veteran investor Radhakishan Damani for Rs 1,885 crore. The move intensifies UltraTech\u2019s rivalry with Gautam Adani\u2019s Ambuja Cements and ACC as both seek to challenge its position as India\u2019s largest building materials maker. The transaction positions Birla as the second-largest shareholder of the Chennai-based India Cements, behind the founders, N Srinivasan and family, who hold 28%.
UltraTech, the world\u2019s third-most-valued cement company, described the deal as a \u201cnon-controlling financial investment\u201d, acquiring shares at Rs 267 each \u2014 a 9% discount to the stock\u2019s Thursday closing price on BSE.
The 23% stake, which does not include a board position in India Cements, is a little shy of the threshold requiring an acquirer to make an open offer to public shareholders under the country\u2019s takeover code. Despite Srinivasan and family owning 28% in India Cements, 46% of that is pledged, according to the company\u2019s filings with the stock exchanges.
This transaction marks the exit of Damani, who is also the founder of retail chain DMart, from India Cements, where he first invested in fiscal 2020. Over the years, he had increased his stake to 22.8% from a little over 1.3%.
Bulk deal disclosures on BSE showed that Damani, his brother Gopikishan, and three related associates offloaded their entire stake.<\/p>\n
\n
<\/div>\n<\/div>\n

Former Ambuja Cements CEO and founder of advisory firm I can Investment Anil Singhvi views the deal as a \u201cpreventive and proactive strategy\u201d by UltraTech. \u201cIt is like a toe in the door and wait until the door opens,\u201d Singhvi said, adding that \u201cthis is a good deal for the sellers as they were stuck in this for a long time and have got a reasonably good value and complete exit.\u201d
The transaction values India Cements, which has a capacity of 14.5 million tonnes, at Rs 10,800 crore. Industry analysts believe that this investment could be a prelude to UltraTech, part of the Aditya Birla conglomerate, potentially increasing its stake and eventually converting India Cements into a strategic asset. The India Cements investment and the Kesoram acquisition will help UltraTech guard its turf in the southern region, especially as the Ambuja-ACC combine attempts to ramp up its presence there. A few weeks ago, Ambuja-ACC bought Penna Cement, seeking to strengthen its southern grip.
The UltraTech investment comes at a time when India Cements is facing rough weather. In recent quarters, it has struggled to meet its working capital needs. Despite narrowing its losses, it has decided to sell certain assets to raise funds. In April, India Cements sold its grinding unit in Maharashtra to UltraTech for Rs 315 crore.
Under Birla\u2019s leadership, UltraTech has become India\u2019s largest cement player with a capacity of 153 million tonnes. When he took over as chairman of the Adi tya Birla Group in 1995, the cement unit\u2019s capacity was less than 5 million tonnes. The sector, expected to double to $49 billion by 2029 from 2022 levels, has long been dominated by UltraTech until Adani entered the market by acquiring Ambuja-ACC in 2022, making him the country\u2019s second-largest player. Ambuja ACC currently has a capacity of 89 million tonnes after expansions and acquisitions of smaller assets.
In a June 13 note, ratings agency ICRA said it expects mergers and acquisitions to continue in the sector, given the aggressive expansion plans of large incumbent players who want to maintain their market shares. Broking firm Emkay said Thursday that it sees at least 40-50 million tonnes of cement capacity changing hands over the next few years.<\/div>\n