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Mumbai Bureau
The Economic Times
Mumbai, 22 June 2004


Grasim Industries, the Aditya Birla group flagship, is finally set to take management control of Ultra Tech CemCo, the cement company carved out of Larsen & Toubro, with its open offer for 30% of the company’s equity finding favour with the institutional and retail shareholders.

Financial institutions — comprising Life Insurance Corporation, General Insurance Corporation and Unit Trust of India which hold 29.6% in Ultra Tech CemCo — put their weight behind the open offer as they tendered their entire shareholding in response to the open offer. Besides, mutual funds, banks, foreign institutional investors and GDR holders have also submitted around 50% of their shareholding.

Grasim officials said that over 600 lakh shares — constituting 70% of the eligible shares — were tendered in the open offer which closed today. Grasim’s offer was for purchase of up to 3,73,20,539 fully paid-up equity shares of Rs 10 each at a price of Rs 342.6 per share.

For the purpose of the open offer, eligible shares in Ultra Tech CemCo — other than those held by Larsen & Toubro and Grasim Industries —aggregated to 839 lakh shares constituting 67.4% of the share capital.

“The response has been overwhelming as we received over 42,000 applications. As per the scheme of arrangement, there will be a pro-rata allotment of the shares. The acceptance ratio is likely to be around 60%,” Grasim’s CFO DD Rathi said.

On Monday, Grasim shares rose 0.9% to Rs 923.3 on the Bombay Stock Exchange.

Concurrent to the open offer, which will result in an outflow of Rs 1,279 crore, Grasim Industries will also buy out an additional 8.5% in CemCo from Larsen & Toubro. Grasim Industries, which currently holds 12.6% in the company, will thus take its shareholding in CemCo to 51.1% for a net cash outflow of Rs 2,200 crore.

“As per the scheme, we need to make the payment to the successful offerees by July 20. But we would like to complete the transaction at the earliest,” Mr Rathi said. Grasim Industries has already deposited the full value of the open offer in escrow account. The payment will include also proportionate interest accrued on the escrow deposit.

After the payment is made, the Ultra Tech CemCo board will be reconstituted to give effect the change in control. Aditya Birla group nominees — chairman Kumar Mangalam Birla and his mother Rajashree Birla — will also step down from the board of Larsen & Toubro as the L&T Employee Welfare Foundation, an employees trust, will acquire the Birlas’ 14.9% shareholding in the residual engineering company.

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