CHENNAI: UltraTech Cement has acquired the cement business of Kesoram Industries Limited, making entry into the southern markets. UltraTech Board on Thursday approved implementation of Kesoram demerger to UltraTech, country’s largest cement manufacturer, and approved composite scheme for their shareholders and creditors. The deal size is not disclosed yet.
Post deal, UltraTech will issue 1 equity share for every 52 equity shares of Kesoram (face value of Rs 10 each). For this, 59,74,301 new equity shares of UltraTech Cement will be issued to Kesoram shareholders. This will increase UltraTech’s equity capital to `294.66 crore consisting of 29.47 crore equity shares of `10 each. This will unlock the value of the cement business and also substantially deleverage the balance sheet including reduction of debt and outflow of interest, Kesoram Industries Limited said.
Kumar Mangalam Birla, the promoter of UltraTech Cement, is also part of promoter group at Kesoram. Few entities controlled by the promoters of UltraTech Cement are a part of the promoter/ promoter group of Kesoram Industries. The transaction is being undertaken on an arms’ length basis, UltraTech said in exchange filings. It’s cement business has two integrated units at Sedam, Karnataka and Basantnagar, Telangana with a total capacity of 10.75 mtpa. Out of this total capacity, 8.50 mtpa is clinker backed and 2.25 mtpa is surplus grinding capacity. It also has a 0.66 mtpa packing plant in Solapur, Maharashtra. It’s turnover stood at Rs 3517.45 crores on March 31, 2023.
Upon completion, UltraTech’s cement capacity will stand at 149.14 mtpa including its overseas operations. This takeover will provide UltraTech an opportunity to extend its footprint in the ‘highly fragmented, competitive, and fast-growing western and southern markets’, the company said in exchange a filing. It will help enhance UltraTech’s reach in southern markets such as Telangana where it does not have any manufacturing plant.