UltraTech’s ₹851 Crore Bet on Star Cement
UltraTech Cement, India’s largest cement manufacturer, has moved forward with a strategic acquisition, purchasing an 8.69% minority stake in Star Cement for a sum of ₹851 crore. This acquisition comes as UltraTech seeks to expand its footprint and consolidate its position in the competitive cement market.
The stake, to be acquired from the Chamaria family, part of Star Cement’s promoter group, is part of UltraTech’s broader strategy to enhance its market presence in eastern India, particularly in the north-eastern markets where Star Cement holds a dominant position. The Chamarias, who control approximately 13-14% of the company, have gradually begun to reduce their holdings, sources close to the deal revealed. However, other promoters, including Century Ply’s co-promoters Sajjan Bhajanka and Sanjay Agarwal, are not part of the sale. Star Cement, a leading player in the north-eastern cement market, has been expanding its reach, notably through a planned greenfield plant in Silchar, Assam, which will add 2 million tonnes to its production capacity. The company, which currently has an installed capacity of 7.7 million tonnes per annum (MTPA), aims to reach a manufacturing capacity of 25 MTPA by 2030.
Star Cement’s strong regional presence, particularly in Meghalaya and surrounding areas, coupled with its plans for expansion, makes it an attractive acquisition target. For UltraTech Cement, this acquisition fits into its aggressive growth strategy. The company recently acquired a controlling stake in India Cements Ltd, further solidifying its leadership in the cement industry. UltraTech, part of the Aditya Birla Group, is aiming for an installed capacity of 200 MTPA by FY27, which is a significant leap from its current capacity of 156.66 MTPA. This acquisition also highlights the ongoing consolidation in India’s cement sector, as both UltraTech and Adani Cement, which recently crossed a 100 MTPA capacity mark, seek to expand their control. Adani Cement has been acquiring smaller players like Sanghi Industries, Penna Industries, and Orient Cement, in line with its aggressive inorganic growth strategy.
Star Cement’s latest financial performance, with a turnover of ₹2,910 crore and a profit after tax of ₹295 crore in FY24, further supports its appeal. As UltraTech continues to expand its portfolio, this deal strengthens its position against competitors like Adani Group’s Ambuja Cement, which is also scaling up its capacity. UltraTech’s stock has shown stability, with its shares trading at ₹11,492.40, a slight increase from the previous close, while Star Cement’s shares saw a 3.94% uptick following the announcement, trading at ₹238.80 on the Bombay Stock Exchange. As the cement industry experiences significant consolidation, UltraTech’s acquisition of a stake in Star Cement is a pivotal move in the race to dominate the Indian market ahead of its competitors.
