Grasim’s open offer in CemCo

Grasim Industries, a part of the AV Birla Group, will make an open offer to shareholders of Ultra Tech CemCo, the demerged cement business of Larsen & Toubro (L&T), at a price of Rs. 342.60 per share. Grasim will offer to purchase up to 3.73 crore fully paid up equity shares of Rs. 10 each aggregating 30 per cent of the share capital of CemCo from the latter’s shareholders. The open offer issue will open on June 6 and close on June 21.

D D Rathi, Group Executive President and Chief Financial Officer, Grasim said, "We are acquiring the cement business purely because of the potential.’’ Following the acquisition, Grasim, which now has a capacity of 13.12Mt, will see its capacity to up to around 30Mt with 16.5Mt coming in from Ultra Tech. Grasim can use the `L&T Cement’ brand for ten months till January 2005. "We are still working out the brand strategy. The issue is not to lose either market premium of market share.’’

Speaking on any possible capacity expansion in the future, Mr. Rathi said, "L&T’s cement business already has around 2.5Mt unutilised capacity. We first plan to use this. Capacity expansion through debottlenecking is anyway an ongoing exercise.’’ Larsen & Toubro’s ready-mix concrete (RMC) business, however, is not part of the transaction. "L&T felt it is more aligned to their construction business,’’ said Mr. Rathi. adding, "But Grasim wants to concentrate on RMC business in the future.’’ Grasim has a capacity of 1.14 million cubic metres of RMC annually spread over six locations and seven plants.