The flagship company of the BK Birla Group, Kesoram Industries, is preparing to sell its cement division to Kolkata-based UltraTech Cement in an all-share transaction valued at about INR 7,600 crore, including debt, according to a PTI report. Kesoram declared that the demerger of its cement company under a scheme of arrangement has been accepted by the board. As part of the agreement, stockholders will receive one UltraTech Cement share for every 52 Kesoram shares, which are valued at INR 10.
Inside the Birla family, a settlement was reached. The AV Birla Group, which owns UltraTech, is led by Kumar Mangalam Birla, the grandson of BK Birla.
With a total capacity of 137.85 MTPA for grey cement, UltraTech claims to be the third-largest cement producer in the world outside of China. Upcoming developments will reportedly increase this capacity to 160 million.
Additionally, the report mentioned that through his family’s investment entities, Kumar Mangalam Birla already has an indirect stake in Kesoram. Its INR 1,700 crore high-cost debt, with interest rates ranging from 18% to 20%, was not managed by the Kesoram administration via lack of fresh capital infusion.
It also said that Kesoram Industries will be able to meet its debt repayment obligations and deleverage its balance sheet thanks to the demerger and merger.
UltraTech will issue the shareholders 59,74,301 new equity shares in connection with this transaction. As a result, its equity capital will rise to INR 294.66 crore, made up of 29.47 crore equity shares at a face value of INR 10.
According to an official statement, UltraTech will have the chance to increase its presence in the country’s fiercely competitive, highly fragmented, and rapidly expanding western and southern regions as a result of the purchase. With the aforementioned regulatory approvals in place, the transaction is anticipated to close within nine to twelve months.
