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This strategic move aims to secure UltraTech's market position in the highly competitive and regionalized cement industry in India.
Transaction Specifics: UltraTech bought 70.6 million shares of India Cements from billionaire investor Radhakishan Damani, his family, and his investment firms Derive Investments and Derive Trading and Resorts. The shares were acquired at up to ₹267 each.
Capacity Blocked: By investing ₹1,900 crore, UltraTech has effectively blocked the capacity of nearly 15 million tonnes, preventing other competitors from gaining this capacity. This positions UltraTech ahead in terms of capacity additions.
Market Share: UltraTech currently holds a 23-24% market share in India and aims to increase its production capacity to 200 million tonnes by March 2027.
Strategic Implications:
Regional Focus: The acquisition strengthens UltraTech's presence in the southern markets of India, which account for a third of the country's total cement production. Prior to this acquisition, UltraTech's presence in the south was relatively limited compared to other regions.
Competitor Moves: This acquisition follows Adani Cement’s recent buyout of Penna Industries, which has a 14-million-tonne capacity.
Future Prospects: UltraTech's investment in India Cements, which has a capacity of around 13 million tonnes across Tamil Nadu, Andhra Pradesh, and Telangana, is seen as a move to bolster its foothold in these key southern states.
Historical Context:
Damani’s Stake: Radhakishan Damani first acquired a 1.35% stake in India Cements in September 2019, gradually increasing it to 22.76% by December 2021. This gradual increase made him a significant stakeholder, which UltraTech has now capitalized on.
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