Rupa Gurunath, Whole-Time Director of India Cements, chaired the company’s 78th Annual General Meeting (AGM) on Monday, addressing shareholder queries about a potential merger with UltraTech Cement.
On July 28, 2024, India Cements’ promoters signed a Share Purchase Agreement with UltraTech Cement Ltd, agreeing to sell their equity shares at .₹390 per share, pending necessary regulatory approvals. UltraTech, part of the Aditya Birla Group, has also announced an “Open Offer” and is awaiting regulatory clearance to complete the process.
Responding to shareholder queries, Gurunath stated that she could not provide specific details regarding the merger but reassured them that UltraTech would prioritise the welfare of India Cements’ employees. “The employees will be taken care of by UltraTech,” she said.
Highlighting the company’s performance, she pointed out that cost-reduction measures recommended by BCG had successfully lowered variable costs at several plants. “We’ve implemented some of the recommendations, and it will continue. We are confident that UltraTech will carry these initiatives forward,” she added.
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Improved Performance
In Q1 of the current fiscal year, India Cements showed improved performance compared to the same period last year. It reported an EBITDA of ₹163 crore, a turnaround from a negative EBITDA of . ₹140 crore in the previous year, despite a 4 per cent reduction in clinker and cement sales
However, realisations saw a slight dip compared to the previous year. Gurunath noted that the company’s strained working capital and ongoing losses impacted operations and sales. Even with reduced variable costs and stable realizations, India Cements couldn’t fully capitalise on the benefits due to lower sales volumes.
She also confirmed that the company has not delayed or defaulted on any loan repayments, managing its finances by recovering some advances and selling non-core assets.
A CareEdge report noted that consolidation in the cement industry could improve pricing power, create cost-reduction synergies, enhance operational efficiency, and expand market reach through cross-branding efforts in the medium to long term.