Paving way for the biggest consolidation in the cement sector, Aditya Birla group company, Grasim, on Saturday said it will transfer its cement business to its unlisted unit Samruddhi Cement. This will eventually be merged into Ultratech Cement."In a proposed restructuring, we (Grasim Cement) would like to demerge our cement business into Samruddhi Cement, a 100 per cent subsidiary of Grasim," Grasim's whole-time director and chief financial officer, Adesh Gupta, said in Mumbai.
On completion of the demerger, Grasim would hold 65 per cent in Samruddhi while Grasim shareholders would hold the balance 35 per cent.
Grasim Cement's grey cement and RMC businesses would be transferred to Samruddhi post-demerger, he said.
“If we achieve the last phase of consolidation, we will have a capacity of 49 million tones and will have a 65 per cent in the company. This will help us in fund raising later to expand the business further,” he said.
The demerger will be completed by March 2010 after which Samruddhi Cement will be listed. Samruddhi will then make an offer to Ultratech for consolidation of the group's cement business.
“Since Grasim is a listed company, it is unfair to shareholders if its not listed after demerger. Also, this will enable the shareholders to exit if they want to before consolidation begins,” said Vallabh Bhanshali, chairman of Enam Securities.
After this consolidation Ultratech will emerge as largest cement maker in India but the question is will this further trigger a wave of consolidation in the sector which is dominated by European firms Holcim and Hiedeleberg..
NITIKA DARMOLI
PGDM sect-B, 3rd-sem
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