UltraTech to Acquire Minority Stake in Star Cement, Cement War to Intensify Further

Leading cement producer UltraTech Cement on Friday announced the acquisition of a minority 8.69 per cent stake in Meghalaya-based Star Cement from the promoters in a deal worth Rs 851 crore, intensifying the competition with Adani Group entity Ambuja Cements for cement assets.

The development comes three days after the Aditya Birla group firm completed the acquisition of a controlling stake in India Cements Ltd, turning the south-based company into its subsidiary.

UltraTech Cement is expanding its capacity through acquisitions and capacity enhancement as it faces competition from billionaire Gautam Adani-led Adani Group's Ambuja Cements, which is the second-largest player and is also scaling its capacity.

Both players are snapping up small cement players to consolidate their positions and achieve their targeted growth ahead of time.

This is the third acquisition of the Aditya Birla group flagship in the last two years, including India Cements, Kesoram Industries' cement business and the UAE-based RAKWCT.

Ambuja Cements has completed the acquisition of Saurashtra-based Sanghi Industries, and Penna Industries and recently announced the acquisition of CK Birla group firm Orient Cement as part of its inorganic growth strategy.

Besides, it has snapped small players' facilities such as My Home, and its subsidiary ACC has also acquired Asian Concretes and Cements.

These acquisitions and expansions helped Adani Cement, a lateral entrant in the sector to cross 100 MTPA (million tonnes per annum) capacity with a pan India presence in 2024, within two years of entry in the sector with 70 MTPA acquired capacity from Swiss firm Holcim.

UltraTech is the leading cement company in India with an installed capacity of 156.66 MTPA of grey cement. To maintain its lead in the sector, the firm plans to have 200 MTPA capacity by FY27.

Meghalaya-based Star Cement has an installed capacity of 7.7 MTPA with a presence in the markets of north-eastern India and is expanding in Eastern markets of West Bengal and Bihar. It is the largest cement brand in North East India.

According to the company, some promoter and promoter group entities of Star Cement "propose to sell their equity holding in Star Cement and have approached the company for the same".

"The board of directors of the company at its meeting held today considered the proposal and approved making an investment to acquire non-controlling minority stake up to 3.70 crore equity shares of Star Cement at a price not exceeding Rs 235 per share, excluding STT, stamp duty and other levies," it said.

Over the cost of acquisition or the price at which shares are acquired, UltraTech said it will "not exceed Rs 851 crore, excluding STT".

UltraTech Cement will pick up stakes from Rajendra Chamaria and his family's holdings, part of the promoter group, sources told PTI.

Only the Chamaria family is selling its stake in the company, while other promoters who control Century Ply remain committed and are not divesting any shares, the sources said.

Rajendra Chamaria, when asked for comments, did not deny the development but refrained from divulging further details.

Meanwhile, the block deal data on the NSE showed that UltraTech Cement bought more than 3.36 crore shares or an 8.32 per cent stake in Star Cement for Rs 766 crore through an open market transaction.

The shares were bought by UltraTech Cement at an average price of Rs 227.70 apiece, taking the total deal value to Rs 765.68 crore.

Star Cement promoter Rajendra Chamaria and promoter group -- Rahul Chamaria, Renu Chamaria and Sachin Chamaria -- offloaded the same number of shares, according to the NSE data.

Shares of Star Cement on Friday closed at Rs 232.05 apiece on Friday at BSE, up 1 per cent. It settled at Rs 229.75 on Thursday. Based on that UltraTech has offered a premium of 2.3 per cent.

The promoters and the promoter groups own 66.47 per cent shareholding in Star Cement, which was incorporated in November 2001.

Star Cement had a turnover of Rs 2,910.66 crore in FY24 and its profit after tax was at Rs 295 crore.

It has seven plants and a total workforce of 4,000. The company aims to achieve a manufacturing capacity of 25 MTPA capacity by 2030, according to information available on its portal.

It has cement manufacturing units at Lumshnong town in Meghalaya, Sonapur near Guwahati and at Mohitnagar near Jalpaiguri, West Bengal. Moreover, it has three grinding units. In 2024, it acquired India Cements Ltd and is in the process of acquiring Kesoram Industries' cement business.

Shares of UltraTech Cement Ltd on Friday settled at Rs 11,400 apiece on BSE, down 0.50 per cent from the previous close.