Samruddhi to Acquire Parent Grasim’s Cement Business
India’s Aditya Birla Group will transfer the cement business of unit Grasim Industries Ltd. to another subsidiary, Samruddhi Cement Ltd., as part of a plan to merge all production and sales of construction materials into a single company.
Shareholders of Nagda, India-based Grasim, which also makes viscose staple fiber, chemicals and textiles, will get 1 share of Samruddhi with a nominal value of INR5 (10 cents) for each share owned, the companies said in a statement today in Mumbai. Samruddhi will also propose to merge with UltraTech Cement Ltd., a part of the Aditya Birla Group that plans to cut costs and make it easier to raise funds to expand cement output.
“We want to consolidate the cement business into one company and today’s decision is an intermediate step in that direction,” Adesh Gupta, Grasim’s Chief Financial Officer, told reporters in Mumbai today. “We need to raise at least $3 billion in the next five years to maintain growth in the cement business and consolidation opens up more financing options.”
The proposed merger of Samruddhi with UltraTech may be completed in “eight to nine months if UltraTech’s management responds favorably,” Gupta said.
The acquisition of Grasim’s cement division by Samruddhi will create a company that produces 26Mt, he said. UltraTech has an output of 23Mt. The Aditya Birla Group plans to add 25Mt to its cement output in five years, he said.
Earlier today, Grasim said in a statement to the Bombay Stock Exchange that Samruddhi Cement has been made its wholly owned unit. Samruddhi Cement was a subsidiary of Samruddhi Swastik Trading & Investment Ltd., also a unit of Grasim.
Grasim’s share price fell 5.1 per cent last week to INR2691.65 on the Bombay Stock Exchange. Published under Cement News
