Renowned cement producing brand Ultratech cement led by Kumar Mangalam Birla is all set to acquire non-controlling 23% stake in Chennai-based India Cements.  The giant cement producing brand intends to own 7.06 crore equity shares of India Cements at a price of up to 267 per share, with a total deal value of 1,885 crore, which is equivalent to nearly $225 million.

The purchase occurs as the dominant player in the market confronts growing rivalry from the Adani Group, which has been swiftly extending its influence in the cement sector. Adani Group presently holds the position of India's second-largest participant in the cement industry, possessing Ambuja Cement.

The acquisition by UltraTech is a crucial step which will continue to consolidate its position as the largest cement maker in India. Previously this year, UltraTech acquired a 1.1 million tonnes per annum (mtpa) cement grinding unit from India Cements in Maharashtra for 315 crore.  

The company also acquired Kesoram Industries' 10.75 mtpa (million tonnes per annum) cement business. Ultratech Cement has been in the forefront in competition with their a consolidated manufacturing capacity of 152.7 mtpa against Adani Group's 77.4 mtpa.

The Adani Group, started operating in cement market in September 2022 by acquiring Ambuja Cement and its subsidiary ACC, has been on an aggressive expansion path. Recently, it acquired Penna Cement for 10,422 crore, aiming to reach a manufacturing capacity of 140 mtpa.

India Cements has been struggling with high operating costs and working capital shortages. As of December 31, it recorded an EBITDA (earnings before interest, tax, depreciation, and amortisation) of just 241 per tonne of cement produced, compared to over 1,100 for larger players like UltraTech and Ambuja.

The company has a cement capacity of 14.45 million tonnes per annum, primarily in the South Indian markets. It recorded a turnover of 5,112 crore in 2023-24, compared to 5,608 crore in 2022-23 and 4,858 crore in 2021-22.

Ultratech has earmarked a profit of 32,400 crore for capital expenditure over the next three years, aiming to increase its grey cement capacity to 198.2 mtpa