UltraTech Cement Limited, one of India's largest cement manufacturers, has announced its approval for a strategic investment to acquire a non-controlling minority stake in Star Cement Limited. The decision was made at the company's board meeting held on December 27, 2024. The board considered the proposal and sanctioned the purchase of up to 3.70 crore equity shares of Star Cement, at a price not exceeding Rs. 235 per share, excluding STT (Securities Transaction Tax), stamp duty, and other applicable levies.

Strategic Investment in Star Cement

The investment in Star Cement signifies UltraTech Cement's intention to strengthen its position in the growing cement industry. Star Cement, which has its registered office in Meghalaya, India, is known for its production of cement and has been a key player in the market. As of March 31, 2024, Star Cement reported a turnover of Rs. 2,910.66 crores. With this investment, UltraTech Cement aims to acquire around 8.69% of Star Cement, making it a non-controlling minority shareholder.

Financial and Regulatory Details

The purchase price for the shares has been capped at Rs. 235 per share, bringing the total cost of the acquisition to approximately Rs. 851.00 crores. Notably, this acquisition does not fall under the category of related party transactions, and the process is expected to be completed within one month. The acquisition does not require any government or regulatory approvals, making it a straightforward process for both parties involved.

Rationale Behind the Acquisition

UltraTech Cement's decision to acquire a minority stake in Star Cement is a strategic move aimed at expanding its footprint in the cement industry. With an ever-growing demand for construction materials in India, particularly in infrastructure and real estate projects, such investments help cement companies like UltraTech strengthen their market presence.

Moreover, this acquisition complements UltraTech's business model by diversifying its investments and enhancing its long-term growth prospects. As the cement industry is expected to see consistent growth in the coming years, aligning with Star Cement, a reputable brand, will allow UltraTech to capitalize on regional growth opportunities.

About Star Cement

Star Cement Limited, incorporated on November 2, 2001, has been a prominent manufacturer and supplier of cement in India. Over the past three years, the company's turnover has shown steady growth, reflecting the rising demand for quality cement. For FY24, Star Cement reported a turnover of Rs. 2,910.66 crores, up from Rs. 2,704.84 crores in FY23 and Rs. 2,221.81 crores in FY22.

Future Prospects of UltraTech and Star Cement

The acquisition of shares in Star Cement is expected to enhance UltraTech Cement's position in the industry, further contributing to its market share and regional growth. With the cement industry showing promise and both companies expanding their footprints, this partnership could prove to be mutually beneficial, with UltraTech Cement gaining a more diverse portfolio and Star Cement enjoying increased strategic backing from a major player in the industry.

UltraTech Cement’s investment in Star Cement underscores the company’s long-term commitment to expanding its operations and maintaining leadership in the cement sector.

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