UltraTech Cement, the largest cement producer in India, said on November 26 that the National Company Law Tribunal has approved its deal for the acquisition of the cement assets of Kesoram Industries Ltd for Rs 7,600 crore.
The acquisition, which was announced in November last year, will consolidate UltraTech Cement’s presence in southern India, an important growth region. The company will, post-acquisition, spend Rs 400-500 crore to bring efficiency at the cement plants of Kesoram.
Funding and Future Plans
To support its operations, the UltraTech board also approved raising Rs 1,000 crore through unsecured non-convertible debentures (NCDs) on a private placement basis. These bonds have a tenure of 10 years with a 7.22% coupon rate.
Financial Performance
Despite this strategic expansion, UltraTech Cement faced challenges in the September quarter:
- Net profit dropped 36% year-on-year to Rs 820 crore, compared to Rs 1,280 crore in the same period last year.
- Revenue from operations fell 2.3% to Rs 15,635 crore, down from Rs 16,012 crore in Q2FY24.
Outlook
Acquisition The deal is seen bringing in greater competitive advantage in the southern markets for Ultratech and would reinforce long-term growth strategy. Suggested improvements in Kesoram’s assets are likely to accret a cost saving and operational upside in the quarters to come.
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Source: Moneycontrol
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