Mumbai, 6 July 2004
Larsen & Toubro (L&T) and Grasim Industries
today announced the completion of the scheme of
demerger of L&T's cement division UltraTech
CemCo (UTCC) with Grasim having acquired
a majority stake in it.
the media here today, A. M. Naik, Chairman and
Managing Director, L&T, said, "This transaction
has helped to unlock value for shareholders and
position the demerged L&T as a focused engineering,
construction and technology company. We have more
than 60 businesses in these areas. In future,
we want to concentrate on areas such as nuclear,
aerospace and defence. We want to become an Indian
MNC (multi-national company) in engineering."
The shareholding pattern of UTCC is 51 per cent
with Grasim, 12 per cent with financial institutions,
11.5 per cent with L&T and the remaining with
institutional and retail shareholders.
Mangalam Birla, Chairman, Aditya Birla group,
said UTCC would be listed in the next few days
on the Bombay Stock Exchange. Also, UTCC now has
in place a new board of directors, includeing
two nominees from the institutions, two from L&T
Mr. Naik and Deosthale, four from Grasim,
namely, Rajashree Birla, Kumaramangalam Birla,
S. Mishra (Corporate & HR Director, Grasim)
and D. D. Rathi. There are also two independent
directors R. C. Bhargava (former Managing
Direcor, Maruti Udyog) and Arun Gandhi (Tata Sons).
Saurabh Mishra will be the Chief Executive Officer
of UTCC. Both Ms. Rajashree Birla and Mr. Kumarmangalam
Birla will step down from the board of L&T.
Mr. Birla said, "The transaction reflects
our commitment to build a leadership position
in cement. We believe that it will take about
2-3 years for UltraTech to provide a competitive
return on the aggressive price offered to its
shareholders. It is also gratifying because the
transaction has created value for Grasim and L&T
stakeholders, the share prices of L&T and
Grasim since the June 2003 announcement of the
intention of de-merger, have out-performed the
BSE Sensex and there has been an overwhelming
response to the open offer."
plans for branding the cement made by UTCC, Mr.
Birla said, "By the end of this financial
year, we hope to phase out the L&T brand and
launch a national brand to replace it. We hope
to launch the new brand after the monsoon season
and phase it in by March 2005. In the future,
we are looking at having two national brands in
cement and two or three regional brands."
Grasim's interest in cement, Mr. Birla said, "We
are aggressively seeking to achieve our goal of
being the market leader in cement. The overall
demand is 117 million tonnes and at 8 per cent
growth; we are looking at a demand of 200 million
tonnes by the turn of the decade. We have to move
ahead of the market. Our interest in L&T was
because of its intellectual capital in its cement
business. We will look at brownfield, greenfield
and inorganic ways to expand."