Birla Group intensifies battle for cement market supremacy with strategic India Cements stake buy
In a major development that is likely to intensify competition in India's lucrative cement sector, UltraTech Cement – owned by the Aditya Birla Group – has acquired a sizable 23% stake in the prominent South-based cement manufacturer India Cements. The sizable financial investment by the country's largest cement producer in a competitor immediately set off speculation about UltraTech's potential plans to consolidate its leadership position through a full takeover.
Sources indicated UltraTech bought the stake from key India Cements shareholders Radhakishan and Gopikishan Damani for around Rs 267 per share, amounting to an enterprise value of over Rs 1900 crores. This acquistion of nearly a quarter of the equity capital gives UltraTech significant influence, though it has maintained the purchase was only a strategic non-controlling financial investment for now.
India Cements is currently under the control of the Srinivasan family including Vice Chairman NSrinivasan and Executive Director Rupa Gurunath. However, the Birla group's sizable intrusion into the shareholding has undoubtedly rattled the promoters, with analysts saying a hostile takeover cannot be ruled out if UltraTech acquires just 3% more to cross the critical open offer threshold.
The deal comes soon after the aggressive cement capacity expansion plans of the resource-rich Adani Group, which recently acquired Penna Cements and has become the domestic sector's number 2 player within a short time. With major capacities and assets changing hands amidst intensifying competition, cement majors are leaving no stone unturned to gain market share in India's Booming construction sector.
It remains to be seen if UltraTech will make a final attempt to take over control of India Cements or maintain its current financial stake. One thing is clear – the battle to cement dominance in the multi-billion dollar Indian cement industry is heating up with each passing day.
