Leading cement producer UltraTech Cement on Friday (December 27, 2024) said it will acquire a minority stake of 8.69% from the promoters of Meghalaya-based Star Cement in a deal worth up to ₹851 crore.
UltraTech Cement will by pick up stakes from Rajendra Chamaria and his family’s holdings, part of the promoter group, sources told PTI.
Only the Chamaria family is selling its stake in the company, while other promoters who control Century Ply remain committed and are not divesting any shares, the sources said.
Rajendra Chamaria, when asked for comments, did not deny the development but refrained from divulging further details.
“The Chamarias are gradually selling out and have approached co-promoters like Sajjan Bhajanka and Sanjay Agarwal. Currently, the Chamarias’ holdings are estimated to be around 13-14%. Any new investor will not have a board seat,” the sources close to the development said.
According to the latest shareholding data, the total stake of all promoter shareholders with the surname Chamaria stands at 11.25%.
The development comes three days after the Aditya Birla group firm completed the acquisition of a controlling stake in India Cements Ltd, turning it into its subsidiary.
The firm is expanding its capacity through acquisitions and capacity enhancement as it faces competition from billionaire Gautam Adani-led Adani Group’s Ambuja cement, which is the second largest player and is also scaling up its capacity.
Both the players are snapping up small cement players to consolidate their positions and achieve their targeted growth ahead of time.
Star Cement has an installed capacity of 7.7 MTPA (million tonnes per annum) with a presence in the markets of north-eastern India and is expanding in eastern markets of West Bengal and Bihar. It is the largest cement brand in north-east India.
Star Cement has recently announced plans to execute a two-million-tonne greenfield plant in Silchar, Assam, and has outlined a long-term roadmap to reach a capacity of 15 million tonnes.
According to UltraTech Cement, some promoter and promoter group entities of Star Cement “propose to sell their equity holding in Star Cement and have approached the company for the same”.
“The board of directors of the company at its meeting held today considered the proposal and approved making an investment to acquire non-controlling minority stake up to 3.70 crores equity shares of Star Cement at a price not exceeding Rs 235/- per share, excluding STT, stamp duty and other levies,” it said.
Over the cost of acquisition or the price at which shares are acquired, UltraTech said it will “not exceed ₹851 crore”.
Shares of Star Cement were trading at ₹238.80 on the BSE, up 3.94 per cent after the announcement.
It has settled at ₹229.75 per scrip on Thursday. Based on that UltraTech has offered a premium of 2.3%.
Star Cement’s peak share price in the last 52 weeks was at ₹255.95 on May 22, 2024, and lowest at ₹169.80 on January 18, 2024.
The promoter Bhajanka family and the promoters group own 66.47 per cent shareholding in Star Cement, which was incorporated in November 2001.
Star Cement had a turnover of ₹2,910.66 crore in FY24 and its profit after tax stood at ₹295 crore.
The Meghalaya-based cement maker has seven plants and a total workforce of 4,000. The company aims to achieve a manufacturing capacity of 25 MTPA capacity by 2030, according to information available on its portal.
It has cement manufacturing units at Lumshnong town in Meghalaya, Sonapur near Guwahati and at Mohitnagar near Jalpaiguri, West Bengal. Moreover, it has three grinding units.
UltraTech is the leading cement company in India with an installed capacity of 156.66 MTPA of grey cement.
To maintain its lead in the sector, the Aditya Birla group flagship firm plans to have 200 MTPA capacity by FY27. In 2024 it acquired India Cements Ltd and is in process of acquisition of Kesoram Industries’ cement business.
Adani Cements, a lateral entrant in the sector, completed the acquisitions of Saurashtra-based Sanghi Industries as well as Penna Industries, and has recently announced the acquisition of CK Birla group firm Orient Cement as part of its inorganic growth strategy.
Besides, it has snapped up small players facilities as My Home and its subsidiary ACC has also acquired Asian Concretes and Cements.
These acquisitions and expansions helped Adani Cement to cross a 100 MTPA (million tonnes per annum) capacity with a pan-India presence in 2024, within two years of entry in the sector with 70 MTPA acquired capacity from Swiss firm Holcim.
Shares of UltraTech Cement Ltd were trading at ₹11,492.40 on BSE, up 0.31% from the previous close.
Published – December 27, 2024 02:27 pm IST
