End of an era as UltraTech ups stake in India Cements to a majority

The deal marks the end of Srinivasan’s era in India Cements. Srinivasan, who headed the BCCI before serving as its secretary, is one of the leading industrialists in Tamil Nadu and his decision to sell the stakes held by him and his family in India Cements comes just months before he turns 80.

Chennai: The consolidating cement industry, on Sunday, saw an announcement by the country’s largest cement manufacturer, UltraTech Cement Ltd that it is beefing up its stake in India Cements Ltd by 32.72 per cent.

This is in addition to the 22.7 per cent the Aditya Birla group company had picked up in June. While the June investment was made at a price of Rs 268 a share, the share purchase approved by UltraTech’s board is at the price of Rs 390 apiece. While this will give the Mumbai-based company a 55.42 per cent stake in India Cements, it will have to follow it up with an open offer at the same Rs 390 a share.

UltraTech said India Cements approached the company post its investment in June expressing their interest in selling their holding in the firm. “…we found it appropriate to acquire their stake in the company,” UltraTech said in a filing at the Bombay Stock Exchange on Sunday.

This round of stake is being picked up from the promoters, including N Srinivasan, his wife Chitra Srinivasan, daughter Rupa Gurunath and S K Asokh Baalaje.

“Post signing of SPA (share purchase agreement) and obtaining regulatory approvals, UltraTech will pay Rs 3,954 crores at Rs. 390 per share for buying 32.72 per cent stake in India Cements from the promoters and their associates. This will trigger a mandatory open offer, at Rs 390 per share. The open offer will be made subsequently after obtaining all regulatory approvals,” the company added.

UltraTech’s move comes soon after Adani Cement took over an unlisted company Penna Cement in June with an investment of Rs 10,000 crore and made evident its intent to make more inroads into the South Indian market. For its part, UltraTech is also rumoured to be in dialogue with other cement makers in the South.

Srinivasan virtually controlled the cement industry in southern India for decades and was accused of a hostile takeover of cement companies like Raasi after he assumed office as vice-chairman and managing director of India Cements, one of India’s oldest corporate firms (established in 1946), in 1989.

The acquisition of India Cement will help UltraTech Cement increase its customer base in Tamil Nadu since its only integrated unit in Reddipalayam in Ariyalur district has a paucity of limestone with limited lifecycle availability.

“The India Cements opportunity is an exciting one as it enables UltraTech to serve the Southern markets more effectively and also accelerates our path to 200+ MTPA capacity,” Kumar Mangalam Birla, Chairman, Aditya Birla Group, said.

India Cements, which boasts a total capacity of 14.45 mtpa of grey cement, especially in Tamil Nadu, sells cement under three brands – Shankar, Coromandel, and Raasi in several variants. The company, whose turnover in the 2023-2024 fiscal was Rs 5,112 crore, has eight plants across India, three in Tamil Nadu, two each in Andhra Pradesh, and Telangana and one in Rajasthan. It also has a grinding unit in Tamil Nadu.

The deal marks the end of Srinivasan’s era in India Cements. Srinivasan, who headed the Board of Control for Cricket in India (BCCI) before serving as its secretary, is one of the leading industrialists in Tamil Nadu and his decision to sell the stakes held by him and his family in India Cements comes just months before he turns 80. His decision to sell the stakes, it is believed, was triggered by the refusal of his family members to run the business if he stepped down due to health issues.

It may be recalled that his tenure at the BCCI also came to an abrupt end after his son-in-law Gurunath Meiyappan was accused of betting on IPL in 2013. The takeover of India Cements is unlikely to affect the ownership of the five-time title-winning Indian Premier League (IPL) team Chennai Super Kings which will continue to be controlled by Srinivasan and his family, according to initial information trickling in here.