Photo used for representation purpose only.
| Photo Credit: Reuters

Following the news of UltraTech Cement acquiring India Cements’ promoters stake on Sunday, it was made clear the transaction will have no bearing on the IPL franchise, Chennai Super Kings.

India Cements bought Chennai Super Kings when the IPL started in 2008, but in 2015, it transferred the team to Chennai Super Kings Cricket Limited (CSKCL), a separate company. Former skipper M.S Dhoni is one of India Cements’ vice presidents.

Former BCCI president N. Srinivasan (Vice-Chairman and Managing Director of India Cements) and his family are the promoters of CSKCL with a 28.14% stake, according to the company’s 2023 annual report, and will continue to own the five-time IPL champion.

Apart from CSK, India Cements has been supporting cricket in Chennai through patronage of various clubs in the TNCA league across divisions. The company has many former first-class and international cricketers as employees. It also operates three teams in the top-flight First Division: Vijay CC, Grand Slam CC, and UFCC (T. Nagar).

It is understood that most of the cricketers employed by India Cements have been moved to CSKCL and won’t be affected by the acquisition.

“The sporting activity of India Cements will not be affected, and the club activities across various divisions will continue without any change. Most of the former cricketers who are employed have already been moved to CSK and will be taken care of,” said a highly placed source.

With the IPL Mega Auction coming up later this year, all eyes will be on whether Dhoni will continue to play for CSK for one more year.

Aditya Birla Group Chairman Kumar Mangalam Birla. File
| Photo Credit: Shashi Ashiwal

Aditya Birla group-owned UltraTech on July 28 entered into a share purchase agreement with the promoters and their associates of India Cements Ltd to purchase 10,13,91,23 equity shares or 32.72% stake for ₹390 apiece totalling to ₹3,954 crore, subject to regulatory approvals.

In June, Ultra Tech acquired 7,05,64,656 equity shares or 22.77% stake at a price of ₹268 per share. Post the acquisition, UltraTech’s stake in India Cements will increase to 55.49%, triggering an open offer. It will become a subsidiary of UltraTech Cement Ltd.

There will not be any change in management of the company till the completion of the acquisition, as per share purchase agreements, India Cements said in a separate filing.

“Post this financial investment, the promoter group approached us as they wanted to sell their holding in the company, and we found it appropriate to acquire their stake in the company,” UltraTech said in a regulatory filing.

Given the limited availability of limestone in Tamil Nadu, it has resulted in restrictions on setting up of new integrated units in Tamil Nadu. The Company’s last integrated unit in Tamil Nadu was acquired by the Company’s parent, Grasim Industries Ltd in August 1998. The proposed transaction is therefore an endeavour to extend the Company’s footprint and presence in the highly fragmented, competitive and fast-growing Southern market in the country, particularly Tamil Nadu, where it has limited presence, UltraTech said.

The operational efficiencies arising out of acquiring ready to use assets will reduce time to market vis-a-vis greenfield projects and will also provide the Company with the opportunity to evaluate the optimization/ deferment of the Company’s existing capacity expansion plans in the Southern market, given the ready to use assets of the target.

This will help augment the Company’s only integrated unit in Tamil Nadu, Reddipalayam Cement Works (1.4 MTPA), which has paucity of limestone with limited lifecycle availability.

India Cements has a total capacity of 14.45 million tonnes per annum (MTPA) of grey cement. Of this, 12.95 MTPA is in the South (particularly Tamil Nadu) and 1.5 MTPA in Rajasthan, while UltraTech is the third largest cement producer in the world, outside of China, with a total Grey Cement capacity of 154.86 MTPA.

“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 over 200 MTPA capacity,” said Aditya Birla Group Chairman Kumar Mangalam Birla.