UltraTech gets Dubai ETA unit
The Aditya Vikram Birla Group on Thursday made a decisive overseas push in its ambition to be a global cement player as its UltraTech Cement announced it would acquire control of Dubai-based ETA Star Cement at a valuation of $380 million, or nearly Rs 1,700 crore.business Updated: Apr 30, 2010 00:36 IST
The Aditya Vikram Birla Group on Thursday made a decisive overseas push in its ambition to be a global cement player as its UltraTech Cement announced it would acquire control of Dubai-based ETA Star Cement at a valuation of $380 million, or nearly Rs 1,700 crore.
The acquisition will take the total capacity of UltraTech, a subsidiary of Grasim Ltd with a production capacity of 49 million tonnes, to 53 million tonnes, to more than double that of ACC and Ambuja Cements controlled by Swiss-based Holcim. The group also controls Samruddhi Cement.
“This is a decent acquisition as it will give the company a direct access to several markets through a direct channel,” said a cement analyst at Sharekhan Securities of the United Arab Emirates acquisition that will also provide a toe-hold in Bahrain and Bangladesh. India’s market size is estimated at 270 million tonnes.
ETA Star's manufacturing facilities include a 2.3-million-tonnes per annum clinker plant and a 2.1 million tonnes grinding plant, both in the United Arab Emirates, a 0.4-million-tonne grinding plant in Bahrain and a 0.5-million-tonne grinding plant in Bangladesh.
But UltraTech’s shares fell by 5.2 per cent at Rs 1,018 on a day that the company reported a fall of 26 per cent year-on-year in its quarterly net profit for January-March, which fell to Rs 228 crore. However, revenues rose 2.5 per cent at Rs 1,922 crore.
UltraTech did not give details of its purchase of a controlling stake of ETA Star Cement, which would be funded with debt and internal cash flows and is expected to be completed by the end of June.
“The acquisition is in line with our long-term strategy of expanding our global presence across businesses and consistent with our vision of taking India to the world,” said Kumar Mangalam Birla, chairman , Aditya Birla Group.
“The GCC (Gulf Co-operation Council) market is expected to grow at 7 percent in future. We have been exporting 2-million tonnes to the region. We know the market and it is a good entry,” KC Birla, CFO, UltraTech.