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As a result of the de-merger, Grasim shareholders will directly hold 35% in Samruddhi, while Grasim's stake would get diluted to 65% in the company. On completion of the de-merger, Samruddhi would be listed on the bourses.
“The de-merger should be complete in the Q4 of the current financial year,” said Adesh Gupta, whole time director and chief financial officer.
Post transfer of the cement assets, Samruddhi would be merged with Ultratech, which would result in creation of India's largest Cement manufacturer, with a capacity in excess of 49 mtpa by end FY2011.
The company has invested Rs8,461 crore for its capacity addition plans, and have proposed another Rs1,000 capacity addition plan at Gujarat. Currently, the company is completing its planned capacity addition plan, which is around 15 mtpa.
“To maintain our market share, we will require around Rs15,000 crore of investment, which will be raided through internal accruals and private equity,” he said. As on today, company’s cash flow is around Rs4000 crore.
At present, the capacity of Grasim is around 22.5 mtpa, and eyeing for 25.7 mtpa in next two years. Whereas UltraTech current capacity is around 23 mtpa.
Impact of the deal:
“We believe that merging of the two companies will see an improvement in operational efficiencies, such as a reduction in lead distance in turn reducing freight costs,” said an analyst from domestic brokerage firm. The proposed restructuring exercise is also expected to provide more financial flexibility for the merged entity. Currently, since both Grasim and Ultratech are operating at optimum levels.
By Rahul Kamat
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