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AV Birla takes over L&T cement firm
BS Corporate Bureau in Mumbai |
July 07, 2004 09:02 IST
The Rs 27,000 crore (Rs 270 billion) Aditya Birla group on Tuesday became the largest cement player in the country through the acquisition of management control of UltraTech CemCo -- the demerged cement business of Larsen & Toubro. Kumar Mangalam Birla, chairman, Aditya Birla group, said, "The transaction has been a gratifying move as it reflects our commitment to build a leadership position ahead. We have become the market leader today with UltraTech CemCo and look at continuing our leadership through a more aggressive approach towards growth."
The group's combined installed capacity is now augmented to 31 million tonne per annum, making it the eighth largest cement maker in the world.
The Aditya Birla group holds a 51.1 per cent stake in UltraTech CemCo, through its flagship company Grasim Industries. The group had invested Rs 2,225 crore (Rs 22.25 billion) for acquiring a majority stake in UltraTech CemCo.
A M Naik, chairman and managing director, L&T, said, "This has been one of the biggest corporate transactions in India and has helped to unlock the value for its shareholders and position the demerged L&T as a focussed engineering, construction and technology company."
"It will take about two to three years for UltraTech to provide a competitive return on the aggressive price offered to its shareholders and earnings will be diluted for some years," Birla said.
The group has outlined plans for further growth in the cement sector through brownfield and greenfield expansions.
"In the next financial year we will be looking at expansion both organically and inorganically for both our cement divisions," he added.
Cost savings of around Rs 100 crore (Rs 1 billion) will be accrued to Grasim on account of operational synergies between the two cement units through common procurement and synergies in logistics.
Birla also said the demand in the domestic cement industry should be around 200 million tonne by the end of this decade and Grasim will look at maintaining its leadership position.
UltraTech listing soon: UltraTech CemCo is set to be listed on the Bombay Stock Exchange in the next couple of days.
Kumar Mangalam Birla, chairman, Aditya Birla group, said, "The BSE is awaiting the permission of the Securities and Exchange Board of India and we expect that the listing should happen in the next couple of days."