India Cements, managing director, N Srinivasan, in an address to the employees on Monday said that he and other promoter group members decided to sell their stake in the company to UltraTech Cement due to cost pressures, price wars, and the inability to sell certain land parcels. He said that these factors added additional pressure on the company.
“We had taken all steps to reduce our cost and we were also relying on an investor to purchase a significant amount of land we own, which would have alleviated many problems. But that did not happen, and therefore, we reverted to the solution we had considered earlier, which is selling the company,” Srinivasan said in a video address to employees on Monday.
In his address, he also spoke about the decades-long history of India Cements, including the contributions of the company’s founder, SNN Sankaralinga Iyer, and his efforts in securing limestone mining licenses for the company.
Meanwhile, according to analysts, while the acquisition of India Cements would further boost UltraTech Cement’s leadership position in general, and strengthen its presence in the Southern market, the cement industry in the region will continue to remain a fragmented market. This is because there are over 30 players in the market here.
According to ICICI Securities, the top five players in the region are set to command 53% share as against 42%. It said that UltraTech’s capacity share will increase from 12% to 23% with the addition of India Cements and Kesoram Industries, positioning it as the largest player in South India.
According to Motilal Oswal, the industry is moving towards greater consolidation, which is expected to improve cement prices in the long term.
On Monday, shares of India Cements ended flat at ₹374.30 on the NSE, while UltraTech Cement’s shares closed at ₹11,898.10, up 2% from Friday’s closing price.