1:18 swap for Ultratech, Narmada Cement merger

Ultratech holds a 97.80% stake in Narmada Cement

Ultratech Cement has proposed to merge its subsidiary Narmada Cement Company with itself. The Ultratech Cement board took the merger decision at its meeting today.

Ultratech holds a 97.80 per cent stake in Narmada Cement, an ailing company which has been under the BIFR net. The merger proposed that the shareholders of Narmada Cement will get one equity share of Ultratech for every 18 shares they held. The merger will be effected from October 1. It is subject to approvals of BIFR and the shareholders.

Ultratech, the erstwhile cement business division of Larsen & Toubro which was acquired by the Aditya Birla group in 2004, had acquired Narmada Cement in 1999.

An year earlier the board of L&T had decided to demerge its cement business into a separate cement company CemCo. Later Grasim acquired an 8.5 per cent stake from L&T and them made an open offer of 30 per cent of equity to acquire management control. CemCo was later renamed to Ultratech.

In the last financial year, UltraTech had to take a hit of Rs 76.84 crore on its balance sheet due to diminution of assets of Narmada Cement, which had accumulated losses of Rs 175 crore.

As a BIFR company, Narmada Cement had got sales tax deferment for eight years amounting to Rs 75 crore and a waiver of electricity duty for the same period, which allowed it a leeway of Rs 25 crore.

Ultratech's scrip closed at Rs 423.85 at the BSE today, a drop of 2.15 per cent from yesterday's close of Rs 433.15.