The Board of Directors of UltraTech Cement has approved a Scheme of Arrangement amongst Century Textiles and Industries, UltraTech Cement and their respective shareholders and creditors. As per the scheme of agreement, Century will demerge the ‘Cement Business’ into UltraTech.
The Cement Business consists of 3 integrated cement units in Madhya Pradesh, Chhattisgarh and Maharashtra with a total capacity of 11.4 mtpa* and a grinding unit in West Bengal of 2.0 mtpa. For the year ended 31st March, 2018, it had reported revenue of Rs. 4,306 crores and EBITDA of Rs. 492 crores (excluding non-recurring items).
The transaction provides UltraTech the opportunity for further strengthening its presence in the highly fragmented, competitive and fast growing East and Central markets and extending its footprint in the Western and Southern markets in the country. The operations will be bolstered by economies of scale arising out of synergies in procurement and logistics costs; creation of efficiencies by reducing time to market, enhancing competitiveness as well as customer service. Other advantages stem from ready to use assets with a strong distribution network, availability of land, railway and other infrastructure. The acquisition is expected to lead to greater shareholder value creation.
The consideration for the demerger will be by way of issuance of equity shares to the shareholders of Century as on the Record Date (defined in the Scheme), in the ratio as recommended by the valuers and approved by the Board. It entails issuing 1 (one) equity share of UltraTech of face value Rs.10/- each for every 8 (eight) equity shares of Century of face value Rs. 10/- each. UltraTech will issue 1.4 crore new equity shares to the shareholders of Century, which will increase its equity capital to Rs. 288.58 crores, divided into 28.86 crores equity shares of Rs. 10/- each. The acquisition will contribute positively to the Company’s earnings.
The transaction is subject to the approval of shareholders and creditors, stock exchanges, NCLT, CCI and all other regulatory approvals as may be required. The transaction is expected to be consummated within 6-9 months.
Walker Chandiok & Co LLP and Bansi S Mehta & Co were the independent joint valuers, Axis Capital provided the fairness opinion and Khaitan & Co and Trilegal (Competition Law aspects) were the legal advisors.
Upon consummation, the Company’s cement capacity will stand augmented to 109.9 mtpa including its overseas operations. This will position UltraTech as the 3rd largest Cement player globally (excluding China).
@EPC World Media
