Rupa Gurunath, Whole-Time Director of India Cements, addressed shareholders during the company’s 78th Annual General Meeting (AGM), responding to speculation about a possible merger with UltraTech Cement.
On July 28, 2024, India Cements’ promoters signed a Share Purchase Agreement with UltraTech Cement Ltd, agreeing to sell their equity shares at Rs 390 per share, pending necessary regulatory approvals. UltraTech, part of the Aditya Birla Group, has also initiated an “Open Offer” and is currently awaiting regulatory clearance to finalise the acquisition.
When questioned about the merger, Gurunath stated that she could not disclose specific details but assured shareholders that UltraTech would prioritise employee welfare. “The employees will be taken care of by UltraTech,” she reiterated.
Discussing the company’s recent performance, she highlighted that cost-reduction measures recommended by BCG have successfully lowered variable costs at several plants. “We have already implemented some recommendations, and these initiatives will continue. We are confident that UltraTech will further these efforts,” Gurunath added.
In Q1 of the current fiscal year, India Cements reported an improved EBITDA of Rs 1.63 billion, a significant turnaround from the negative EBITDA of Rs 1.4 billion in the same period last year, despite a 4% drop in clinker and cement sales. However, realisations saw a marginal decline, and the company’s strained working capital and ongoing losses impacted its ability to fully leverage these cost savings.
Despite reduced variable costs and stable realisations, lower sales volumes limited the company’s ability to capitalise on these improvements. Gurunath also clarified that India Cements has not delayed or defaulted on any loan repayments, managing its finances through recovery of advances and sales of non-core assets.
A recent CareEdge report suggested that consolidation in the cement industry, such as the potential UltraTech-India Cements merger, could strengthen pricing power, create cost-reduction synergies, and improve operational efficiency, ultimately enhancing market reach and brand positioning in the long term.
(BusinessLine)
