UltraTech set to fold in Grasim’s cement biz | business | Hindustan Times
Today in New Delhi, India
Mar 25, 2017-Saturday
New Delhi
  • Humidity
  • Wind

UltraTech set to fold in Grasim’s cement biz

business Updated: Oct 02, 2009 20:50 IST
HT Correspondent

Grasim Industries, the flagship of the Aditya Vikram Birla Group, is close to announcing the merger of its cement business with UltraTech Cement, the group’s cement firm, in a consolidation of the $29-billion (Rs 140,000 crore) group.

UltraTech was founded in 2003 after the group acquired the cement division of Larsen & Toubro, the engineering giant.

Industry sources connected with the developments confirmed the merger plan. Grasim's board is scheduled to meet in Mumbai on Saturday to approve the deal, the details of which are expected to be announced by Chairman Kumar Mangalam Birla.

Company officials declined to comment on the deal which is expected to create an entity that would produce more than double the amount that ACC, the country’s largest cement maker by volume, produces now.

ACC has a production capacity of 20.8 million tonnes per annum.

The combined cement production capacity of Grasim and UltraTech will stand at 42 million tonnes, of which UltraTech currently controls 22 million tonnes.

The development comes after L &T sold its 11.5 per cent stake in UltraTech last June in open market transaction.

A transfer of Grasim's cement business assets to UltraTech would bolster the latter's annual revenues roughly by Rs 7,000 crore to Rs 13,378 crore, according to industry analysts.

On the other hand, it would leave Grasim to grapple with its other businesses such as textiles, Viscose Staple Fibre (VSF) and chemicals, which are far less profitable when compared with cement.

Cement contributed 64 per cent of Grasim's revenues of Rs 10,940 crore for the year ended March 31, 2009. VSF accounted for sales of Rs 2,534 crore, chemicals Rs 523 crore and textiles Rs 58 crore, according to company disclosures.

Ahead of the board meeting, shares of Grasim fell 2.44 per cent or Rs 67.55 on the BSE and closed at Rs 2,700.80 per share.

UltraTech shares, however, rose 6.4 per cent or Rs 50.80 to close at Rs 848.90.

The Aditya Birla group had bought out the stake held by the undivided Reliance Industries in L&T and subsequently L&T’s cement business was hived off into a separate company with absolute control lying with the Birlas.