Business Daily from THE HINDU group of publications
Saturday, Oct 03, 2009
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Business Daily from THE HINDU group of publications Saturday, Oct 03, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Cement Corporate - Restructuring
About 70 per cent of Grasim’s revenues derived from cement Board to meet on Saturday to consider business restructuring 
Our Bureau Mumbai, Oct. 2 The Aditya Birla group’s plan to spin off Grasim Industries’ cement business into a separate entity and merge it with its subsidiary, UltraTech Cement, could dilute the earnings potential of Grasim which derives about 70 per cent of its revenue from cement. Of Grasim’s total revenue of Rs 3,079 crore in the first quarter of this fiscal, the cement business contributed Rs 2,146 crore. In the last fiscal, it accounted for over Rs 7,000 crore of the company’s revenue of Rs 10,940 crore, while sales of VSF or viscose staple fibre (Rs 2,534 crore), chemicals (Rs 523 crore) and textiles (Rs 58 crore) accounted for the balance. However, the transfer will boost UltraTech Cement’s annual revenue to Rs 13,378 crore. Though there is still no official word on the merger, market sources say the group might have changed its earlier stand of holding two brands in the cement industry after L&T sold its stake in UltraTech. According to a BSE communiqué, the Grasim board will meet on Saturday to consider a business restructuring proposal. The Grasim stock fell 2.44 per cent to close at Rs 2,701 on Thursday. Going by the shareholding pattern on June 30, 2009, Grasim holds 50.70 per cent in UltraTech, while the total promoter holding is 54.78 per cent. The promoters’ holding in UltraTech will rise further post the merger. The combined cement production capacity of Grasim and UltraTech is 46 million tonnes per annum (mtpa) with the latter having a slight edge with 23.10 mtpa. Their closest rival, Holcim-owned ACC and Ambuja Cement, jointly have a capacity of 48 mtpa. The flagship company of the A. V. Birla group, Grasim, began as a textile manufacturer in 1948. The group merged the cement business of Indian Rayon with Grasim Industries in 1998 in a bid to consolidate its cement business. In 2004, L&T sold 51 per cent holding in UltraTech to Grasim, retaining 11.5 per cent stake with itself. This June, L&T completely divested its stake. Subdued VSF, sponge iron biz hits Grasim profits Rajasthan clinker facility may increase Grasim cement dispatches Grasim profit falls 36% at Rs 460 cr in Q3 More Stories on : Cement | Restructuring | Mergers & Acquisitions | Grasim Industries Ltd
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