For Indian cement manufacturers, the compass is pointing southward, with UltraTech Cement now charting the course with the acquisition of a 23% stake in Chennai-based India Cements.
The Aditya Birla Group company joins the bandwagon of companies such as Adani Cements — the holding company of Ambuja Cement and ACC, and Shree Cement, which had earlier expanded their presence in the south.
According to industry experts, housing and infrastructure development is happening across the southern states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh and Telangana. There is a rise in road projects — including state and national highways — metro rails and airports, apart from industrial sectors.
According to Cement Manufacturers’ Association data, the total installed capacity of the south Indian states stands at about 184 MTPA, and with the highest production share of 33%.
“Infrastructure developments and economic rebound in neighbouring Sri Lanka, a potential market for cement, is also making the south a hot destination,” an industry executive said.
On Thursday, UltraTech Cement acquired a 23% stake in Chennai-based India Cements for about `1,889 crore through open-market transactions. Last year, the Aditya Birla Group company had entered into a deal to buy Kesoram Industries, a move that would help it mark its foray into Telangana.
The deal would also add another 10.75 million tonne capacity to UltraTech Cement’s total production capacity.
In April, Ambuja Cement, an Adani Group company, had entered into an agreement to acquire My Home Group’s 1.5 million tonne per annum cement grinding unit in Tuticorin in Tamil Nadu for an estimated `413.75 crore. Later, on June 13, Ambuja Cement signed an agreement to acquire Penna Cement Industries (PCIL) for `10,422 crore. The deal was to help the group expand presence not only in south India but also get access to the Sri Lankan market.
Shree Cement had announced capacity expansion in Karnataka, even as Dalmia Bharat was in the process of setting up a cement mill in Ariyalur, Tamil Nadu. Ramco Cements, India Cements and Dalmia Bharat are the existing players in the south.