Ultratech eyes overseas buy

MUMBAI: Ultratech Cement, part of the diversified Indian conglomerate Aditya Birla Group, is scouting for acquisitions overseas to enhance its cement manufacturing capacity by 50% to 75 million tonnes.

Confirming this move, Kumar Mangalam Birla, chairman of Ultratech Cement, said, "Ultratech is planning to make investments in the Indian Ocean region (IOR) to enhance its cement manufacturing capacity. We are in the lookout for value adding opportunities. We are exploring both organic and inorganic growth to further strengthen our leadership position."

However, Birla categorically denied news reports of the firms plan to acquire Latin American assets of Cemex and Votorantim Group. Speaking to TOI on the sidelines of Ultratech's 11th AGM, Birla said, "The news is factually incorrect and we have no such plans."

Analysts believe that the Indian cement sector reeling under pressure due to over capacity and therefore it's the right time for Indian cement firms to augment capacities overseas in key growth markets. India, with a cement manufacturing capacity of 100 million tonnes per annum is doubling its capacity in the next five years.

The company has lined up capex of $2.4 billion to enhance its capacity by another 9.2 million tonnes by 2014. Ultratech plans to fund this expansion through a mix of internal accruals and borrowings as its debt-equity ratio stands at 0.39 and has ample head room for raising debt. Justifying his Gulf acquisition while addressing a shareholders querry, Birla said, "The market for cement in Emirates and GCC will look up in the next two years. By acquiring ETA Star Cements, we got a market share of 10% in an established brand name."

Last year, Ultratech amalgamated Samruddhi Cement with itself and is now India's second largest cement producer and ninth largest player in the world.

Birla has highlighted that the company would like to be a top three player globally in key segments of its businesses including cement. Shares of Ultratech closed down 2.5% at Rs 1088 in a weak Mumbai market on Friday.