UltraTech Cement, led by Kumar Mangalam Birla, is purchasing a 23% stake in Chennai-based India Cements to counter the Adani Group's expansion and strengthen its position in the South Indian cement market.

UltraTech Cement, India's largest cement producer, will pay Rs 267 per share to acquire 70.6 million shares of India Cements, amounting to a Rs 18.85 billion deal. This acquisition will make the Aditya Birla Group the second-largest shareholder in India Cements, which is currently 28.5% owned by its founders. UltraTech has stated that this is a non-controlling investment.

The acquisition comes as cement manufacturers stand to benefit from Prime Minister Narendra Modi's third term, with anticipated increases in infrastructure spending. India is the world's second-largest cement producer.

This move follows the Adani Group's recent acquisition of Hyderabad-based Penna Cement Industries for $1.2 billion, further intensifying competition in the South Indian cement market. The Adani Group became India?s second-largest cement producer in 2022 after acquiring Ambuja Cements, ACC, and several smaller firms.

By acquiring India Cements, UltraTech aims to maintain a strong presence in South India. UltraTech previously increased its market share in the region to 11% by purchasing Kesoram Industries' cement business for Rs 53.79 billion.

UltraTech currently has an annual capacity of 152.7 million tonnes, compared to the Adani Group's 89 million tonnes. UltraTech targets 200 million tonnes by March 2027, while the Adani Group aims for 140 million tonnes by 2028.

The deal also helps UltraTech to further increase its market share in South India by an additional 8%. As of March 2024, UltraTech's market share in the region was estimated at 6%. (Source: HT)