Birla Corporation completes acquisition of Reliance Infra's cement business
Birla Corporation Limited, the flagship company of the M P Birla Group, said it has completed acquisition of the entire cement business of Anil Ambani-led Reliance Infrastructure by acquiring 100% equity shares of Reliance Cement Company Private Limited (RCCPL).
“We now wish to inform you that the company has acquired 100% equity shares of RCCPL from RIL. Consequent to the said acquisition of shares, RCCPL has become a wholly-owned material subsidiary of Birla Corporation Ltd,” Birla Corporation said in a stock exchange filing.
In February this year, Birla Corporation signed a definitive Share Purchase Agreement with Reliance Infrastructure Limited for acquisition of its entire cement business for an enterprise value of Rs.4,800 crore.
Commenting on the completion of the acquisition, Harsh V. Lodha, chairman, Birla Corporation, said, “Reliance plants add a lot of strategic value to the existing cement business of Birla Corporation. We have got not only modern and efficient plants but also excellent opportunity of synergizing the business of Birla Corporation and Reliance Cement to gain maximum advantage in the region we operate in and increase our share in the rapidly growing cement market. That apart, there is scope for further optimisation of the operation of Reliance Cement that would yield substantial benefit to the Company.”
Lodha said it was a natural fit with Birla Corp’s footprint in Central and Eastern India. The Company can gain a sizeable presence in the profitable Western market by expansion of the Mukutban operations. The economies of scale and synergies would help the Company invest in brand, channel, manufacturing, product and marketing innovations for creating greater value for all stakeholders.
After the company’s latest annual general meeting held in July, Lodha told reporters that he was hopeful of completing the acquisition by September this year.
Replying to the shareholders’ queries, the chairman had said Reliance Infra’s cement business would be a ‘good fit’ for the company. According to Birla Corp, the acquisition will provide the company ownership of modern plants and take its total cement production capacity from 10 MTPA to 15.5 MTPA, strengthening its presence in the high growth Central region.
RCCPL has three cement units, an integrated cement plant at Maihar (Madhya Pradesh) and grinding units at Kundanganj (Uttar Pradesh) and Butiburi (Maharashtra).
In its latest annual report, the Kolkata-headquartered company has said it will benefit from Reliance Cement’s strategically located raw material sources, captive coal mine, optimum manpower, efficient operating parameters and technical capability for producing top-end quality product.
Birla Corp has earlier reported a whopping 278% year-on-year jump in its net profit to Rs.94.33 crore for the June quarter from Rs. 24.95 crore in the year-ago period. The cement major’s net sales saw 16.6% y-o-y rise at Rs. 893.57 crore in the first quarter compared to Rs. 766.27 crore in the corresponding period last fiscal.