Within one-and-a-half-months of Grasim's decision to demerge its cement business, the second phase of consolidation is likely to begin tomorrow.
UltraTech Cement, a part of the Aditya Birla Group, has convened a board meeting on Sunday to decide the proposed merger of Samruddhi Cement with itself. Samruddhi is the new entity in which Grasim decided to transfer its cement division last month as the first step towards consolidation.
Samruddhi's merger with UltraTech will create the largest cement firm in the country with a production capacity of 50 million tonnes, much ahead of the current largest cement maker, ACC. Both the companies are subsidiaries of Grasim Industries.
UltraTech's board will consider the recommendations of the committee which was set up in October to evaluate and consider the proposal in consultation with legal and financial advisors. UltraTech had received the proposal from Samruddhi Cement regarding a potential consolidation of the two entities.
Grasim assets which will move to Samruddhi include cement capacity of 25.7 million tonnes, 36 ready-mix concrete plants and 268 Mw of captive power. The demerger is expected to be completed by March.
On completion of the demerger, Grasim shareholders will directly hold 35 per cent of Samruddhi and Grasim's stake in Samruddhi will dilute to 65 per cent.
Upon final consolidation with UltraTech, Grasim's stake in the merged entity will be between 55 per cent and 65 per cent. DSP Merrill Lynch and Enam Securities are the advisors to Grasim on the restructuring process.
Currently, Samruddhi has a three-member board which includes Grasim CFO Adesh Gupta and UltraTech CEO Saurabh Mishra.
Grasim will require Rs 15,000 crore to add another 25 million tonnes of capacity, which will take the total to 75 million tonnes in the next five years.
