Corporate Bureau
The Financial Express
Mumbai, 21 June 2004

Ultra Tech Cemco, the cement company carved out of Larsen & Toubro’s (L&T) demerged cement business, is all set to become a subsidiary of Grasim Industries. The AV Birla Group flagship has received an overwhelming response to its open offer for an additional 30 per cent stake in CemCo, taking its overall stake to 51 per cent.

A total of 8.39 crore shares of CemCo qualified to participate in the open offer. This is excluding the shares held by Grasim and L&T. Over 6 crore shares constituting over 70 per cent of the eligible shares have been tendered in the open offer. The acceptance ratio is likely to be around 60 per cent.

The offer was for 3.73 crore shares at Rs 342.60 per share.

All sections of shareholders in CemCo — retail public, domestic mutual fund, banks, FIIs and GDR holders and financial institutions — participated in the open offer, according to a release issued by Grasim.

The shareholders of CemCo have thus capitalised on the opportunity to encash the value at an attractive open offer price, according to the company.

Grasim had already deposited the full value of the 30 per cent open offer, equivalent to Rs 1,279 crore in an escrow account and will make payment to the successful offerees as per schedule. The payment will also include the proportionate interest accrued on the escrow deposit, which will be in addition to the open offer.

Sources added that all the FIs, including Life Insurance Corporation of India (LIC) and the Specified Undertaking of Unit Trust of India, who were the two major stakeholders with around 14 per cent and 8 per cent stake in CemCo, have tendered their entire stake in the open offer.

Grasim will also shortly acquire 8.5 per cent stake in CemCo from L&T as per the scheme of arrangement and sell to the L&T Employees Trust the stake held by it in L&T. This will take place shortly, according to Grasim CFO DD Rathi.

Following the payment to the successful offerers and the acquisition of the L&T stake, the board of CemCo will be reconstituted.

The successful completion of the open offer marks the end to one of the most fascinating battles fought in Indian corporate history. With twenty-nine million tonne cement capacity now firmly under his control, AV Birla Group chairman Kumar Mangalam Birla is now undoubtedly the commodity king of India.