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| UltraTech board okays Samruddhi Cement merger |
| BS Reporter / Mumbai Nov 15, 2009, 18:03 IST |
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Samruddhi Cement, a wholly-owned subsidiary of Grasim Industries, is all set to merge with UltraTech Cement – Grasim’s another subsidiary, on July 1, 2010. The merger, to be completed by September 2010, will result into world’s tenth-largest cement maker.
In a meeting held today, UltraTech’s board approved the merger of Samruddhi with itself. As a part of the scheme of amalgamation, Samruddhi’s shareholders will get four shares of UltraTech of face value Rs 10 for every seven shares of Samruddhi of face value of Rs 5 each.
UltraTech will issue 14.95 crore of new shares, thereby increasing its equity capital to Rs 274.20 crore. Upon effectiveness of the merger, Grasim will hold 60.3 per cent stake in UltraTech's expanded equity and 39.7 per cent will be directly held by the other shareholders of UltraTech and Samruddhi.
On completion of the merger, Samruddhi shareholders will get direct participation in the largest domestic cement maker. The proposed merger will be subject to the approvals of the High Court of Bombay and the High Court of Gujarat.
The merged entity will have a capacity of 48.8 million tonnes per annum with 22 plants. The captive power generation capacity will stand at 504 Mw and the number of Ready Mix Concrete plants will be 68 with an overall capacity of 11.7 million cubic meters.
Upon effectiveness of the scheme of amalgamation, which is expected to be completed by September 2010, Samruddhi will stand dissolve without winding up.
With Samruddhi’s assets, UltraTech will add speciality products of white cement and wallcare putty in its product kitty apart from its existing grey cement.
Kumar Mangalam Birla, chairman of Aditya Birla group, said: "The merger will achieve the groups’s objective of consolidating its cement business into a single entity, thereby creating a platform that will help in pursuing aggressive growth going forward."
The cement business of Grasim is currently under demerger process with all its assets being shifted to Samruddhi, and the proposed merger of Samruddhi with Ultratech will take effect only after completion of the demerger process and listing of Samruddhi.
Adesh Gupta, whole-time director and CFO of Grasim, said: "Grasim will retain a strategic and controlling interest in UltraTech while providing UltraTech flexibility for future fund raising."
"The merger represents an inflexion point for UltraTech," said K C Birla, CFO of UltraTech. He further added that the combined profitability and cash flows of the resultant entity would provide an impetus to the company’s growth.
DSP Merill Lynch and Enam Securities are the financial advisors for the current restructuring of cement business of the group.
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