Aditya Birla Group’s UltraTech to Buyout N. Srinivasan’s Stake in India Cements for ₹7,000 Crore

UltraTech Cement, part of the Aditya Birla Group, is in advanced discussions to buy a 28.42% stake in India Cements from VC and MD N. Srinivasan. This purchase would increase UltraTech’s total holding in the South India-based company to 51%, according to sources.

This move will trigger an open offer by UltraTech to buy more shares at an estimated price of ₹400-430 per share, about 8-15% higher than the current market price. UltraTech is expected to spend around ₹7,000 crore for Srinivasan’s stake and the mandatory open offer.

Due Diligence and Formal Announcement

UltraTech’s senior officials are conducting due diligence, and a formal announcement is expected soon. The deal has been in the works for a while, especially after UltraTech acquired Radhakrishna Damani’s stake in India Cements in June this year.

Strategic and Succession Considerations

A source mentioned that this buyout makes good business sense, especially considering N. Srinivasan’s age and health. Srinivasan, who will turn 80 in January, has been leading India Cements since 1989 after the death of his father, T. S. Narayanaswami.

His daughter Rupa Gurunath, 50, and his wife Chitra Srinivas, who are both on the board, have no interest in running the business after Srinivasan steps down.

Previous Acquisitions and Financial Implications

UltraTech previously bought around 23% of India Cements for ₹1,908 crore, paying an average of ₹269 per share in a deal with Damani. Depending on how many current shareholders sell their shares in the open offer, UltraTech’s total outlay could reach ₹9,000 crore.

This would imply a valuation of $120 per tonne for India Cements on an EV/ton basis.

Market Comparisons and Capacity Expansion

Recent deals for cement companies with less than 20 MTPA capacity have ranged from $85 to $110 per tonne. For instance, Ambuja Cement bought a 14 MTPA capacity of Penna Cement at $89 per tonne.

India Cements currently has an installed capacity of 14.5 MTPA, while UltraTech’s total capacity is 141 MTPA, soon to increase to 152 MTPA. The acquisition would enhance UltraTech’s market share in southern India, which accounts for about a third of India’s total capacity of 600 MTPA.