In a significant development for the cement industry, the Competition Commission of India (CCI) has sent a notice to UltraTech Cement concerning its proposed acquisition of India Cements, a Chennai-based player in the market. The notice, issued under Section 29(1) of the Competition Act, is typically dispatched if the Commission believes that the merger could potentially impact competition in the market.
UltraTech received the notice on Thursday, December 5, and the company now has a 30-day window to respond to the Commission’s concerns, if any, or to argue why an investigation should not be pursued into the merger. UltraTech has expressed confidence in the merits of the deal, stating in a public filing that it believes the merger will not harm market competition. The company argued that the southern cement market, where India Cements primarily operates, is “highly competitive and fragmented,” with over 35 cement manufacturers active in the region. The merger process is part of UltraTech’s ongoing strategy to consolidate its position as India’s largest cement producer. Earlier this year, the company acquired a 23% non-controlling financial stake in India Cements in June, followed by the acquisition of another 32.72% stake from the company’s promoters and associates in July.
UltraTech has also made an open offer for an additional 26% stake, aiming to gain a controlling interest in the company. In response to the notice, India Cements also confirmed receiving a notice from the CCI and is preparing its response. The company, like UltraTech, believes that the competitive landscape of the cement market will satisfy any concerns the CCI may have. The cement sector is one of the most competitive in India, particularly in southern regions, where both UltraTech and Adani Cement are ramping up their market presence. A legal expert with a leading law firm highlighted that the CCI could approve the deal if it is convinced by the responses from the companies. The companies might offer remedial measures to address concerns, which could lead to a favourable decision. However, if the CCI is unsatisfied with the responses, the deal could proceed to Phase 2 of the investigation, where the regulatory body would conduct a deeper probe into the potential impact on market competition.
Before acquiring India Cements, UltraTech had already expanded its reach by acquiring the cement division of Kesoram Industries earlier this year. This deal, which includes a cement capacity of 10.75 million tonnes across Karnataka, Telangana, and Maharashtra, was cleared by the CCI in March. As the CCI reviews the UltraTech-India Cements acquisition, the outcome of this investigation will have a significant impact on the cement sector, particularly in the highly competitive southern Indian market, where demand remains robust.
