On Thursday, Kumar Mangalam Birla, Chairman Ultratech Cement confirmed that the company will complete its merger with Century Cement during the second quarter of the current fiscal year, which will help in enhancing its capacity to 117.35 million tones.
The Aditya Birla Group announced in May 2018, a reorganisation of the center business of the group firm Century Textiles’ cement business, under a scheme of demerger.
The deal, which has long been in the works involving Kumar Mangalam Birla and his grandfather BK Birla (who passed away earlier this month) will give Ultratech market leadership in all regional markets.
Ultratech will get ready ownership of 13.4 million capacity spread across MP, Chhattisgarh, and Maharashtra through this reorganisation. This deal will also help the land-endowed Century focus more on its real estate business and reduce the debt by Rs 3,000 crore.
Birla said that apart from China, Century Cement is the third-largest cement maker in the world. With this merger, Century is expected to further support this. He also told the shareholders that, after the completion of Century Cement transaction, coupled with the on-going capacity expansion, the capacity will be augmented to over 117.35 million tonnes per annum, inclusive of its overseas operations
The company has already got the approvals for this from the exchanges, the Competition Commission and the shareholders apart from the NCLT, he said, adding the transaction will be effective in the second quarter of FY20. The transfer of the mining leases in the only approval is pending and should be done any time now.
The merger will not only strengthen the companies presence in the Eastern and Central markets but will also extend its footprints in the Southern and Western markets. Century’s cement business consists of three integrated units in MP, Chhattisgarh and Maharashtra and a grinding unit in Bengal.
Birla further confirmed that once the transfer of the mining leases gets completed, the financials will be recast to give effect to the necessary changes.
As of March 2019, Ultratech had an installed consolidated capacity of 102.75 mt of grey cement (including 4 mt under commissioning), a capacity of 0.68 mt of white cement and two wall-care putty plants.
In FY19, it reported a net income of Rs 2,456 crore as against and Rs 2,231 crore in FY18 on a revenue of Rs 35,704 crore, which rose from Rs 29,358 crore.