UltraTech's cement capacity will increase to 91.1 mtpa including its overseas operations post the acquisition
Mumbai: Aditya Birla Group-promoted UltraTech Cement Ltd expects to complete its acquisition of the Jaypee Group’s cement assets in the next 12 months, company chairman Kumar Mangalam Birla told shareholders at the annual general meeting (AGM) on Tuesday.
Birla added that the company will not look at any further acquisitions, but will focus on the Jaiprakash Associates Ltd cement assets acquisition.
“No more acquisitions are being planned after Jaypee," Birla said, while answering questions posed by shareholders at the AGM in Mumbai.
On 4 July, UltraTech amended an agreement with Jaiprakash Associates, agreeing to buy its 21.1 million tonne cement assets for ₹ 16,189 crore, ₹ 289 crore higher than the enterprise value agreed upon earlier.
“The scheme is subject to regulatory approvals. We expect it to be consummated within the next 12 months. UltraTech’s cement capacity then will stand augmented to 91.1 million tonnes per annum (mtpa) including its overseas operations," Birla said.
He added that the deal with Jaiprakash Associates is essentially a geographic market expansion which will lead to the cement maker’s entry into growing markets of India. “The operations will be strengthened by the consequent technological upgradation and enhancement in capacity utilization on a year-on-year basis. It will lead to creating synergies in manufacturing, distribution and logistics," Birla said.
He expects these synergies to bring advantages like economies of scale and creation of efficiencies by reducing lead time to markets. “Alongside it will enhance competitiveness benefiting consumers and in turn creating value for shareholders by acquiring ready-to-use assets," he said.
Birla said he remained optimistic about the growth of cement demand in India. “The government’s focus on infrastructure development, housing sector, smart cities, roads, etc., along with good monsoon should drive growth in the agriculture sector.
UltraTech is positioned across the country to meet the rise in demand and participate in the next phase of growth in the country," he said.
UltraTech plans to invest about ₹ 1,500 crore as capital expenditure, Birla said, without elaborating on what the planned investments would be for.
On questions raised on the recent acquisition of Lafarge India Pvt. Ltd’s assets by Nirma Ltd, Birla said, “We could not bid for the assets due to regulatory restrictions. Being the industry leader in cost and quality, we do not see any threat from any player."
On 11 July, Nirma agreed to buy Lafarge India’s 11 million tonne cement assets for ₹ 9,400 crore.
Birla also clarified that post the Jaypee cement assets acquisition, the company would have scope to make future acquisitions if required.
“The deal will put some (competition regulatory) restrictions on certain markets, but there would still be enough headroom for acquisitions in various other markets," Birla said.
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