UltraTech to buy majority in Dubai’s ETA Star, deal seen at Rs 900 crore

CONCRETE PLANS

ULTRATECH Cement, the country's second-largest cement maker and a part of Aditya Birla group, said on Thursday it would acquire Dubai-based ETA Star Cement for an enterprise value of Rs 1,700 crore. UltraTech CFO KC Birla said the deal will be funded through a mix of debt and internal accruals. ETA Star has a market share of 10% and 20% in Abu Dhabi and Bahrain, respectively. He, however, did not disclose the cost of acquiring the stake nor the size of equity. A person familiar with the deal said UltraTech would pay around Rs 900 crore to acquire a majority stake in ETA Star. 

    UltraTech said the transaction would be completed by the June quarter, and would be accretive to its earnings per share. "The acquisition is in line with our long-term strategy of expanding our global presence across businesses," group chairman Kumar Mangalam Birla said in a statement. 
    The acquisition would give UltraTech the advantage of size, say analysts. "Apart from adding value to its capacity, it will benefit UltraTech as Abu Dhabi and Bahrain's real estate markets are not as depressed as Dubai," said Rupesh Sankhe, a cement analyst with Angel Securities. 
    The economies of both Abu Dhabi and Bahrain are largely driven by oil, which, given the recent rise in crude prices, could soon revive construction activity, said another analyst, who did not wish to be named. 
    ETA Star's manufacturing facilities include a 2.3 million tonne clinker plant and a 2.1 million tonne grinding plant, both in the United Arab Emirates, a 0.4 million-tonne grinding plant in Bahrain and a 0.5 million tonne grinding plant in Bangladesh. 
    UltraTech has recently proposed to get regulatory approval to absorb the cement business of group firm, Samruddhi Cement, on July 1. Post approval, it would become country's largest player with 49 million tonnes capacity, surpassing Holcim's ACC and Ambuja combined, Mr Sankhe added. "The acquisition, together with the amalgamation of Samruddhi Cement with UltraTech, will enhance UltraTech's capacity to around 52 million tonnes," said OP Puranmalka, whole-time director of UltraTech. 
Co's net falls 26% 
on high input costs 
ULTRATECH has posted a 26% fall in quarterly profit, lagging market forecasts, due to higher input costs and lower realisations. It has reported a net profit of Rs 229 crore in the March quarter, compared to Rs 309 crore in the yearago period. However, its revenue grew 3% to Rs 1,909.4 crore. The worse-than-expected financial performance pulled down the UltraTech stock in a flat Mumbai market. The stock fell 5.2% to Rs 1,018.6 on BSE on Thursday. — Our Bureau