Corporate Bureau
Financial Express
Mumbai, 7 July 2004

UltraTech CemCo, the new cement company within the AV Birla Group fold, will launch a new national cement brand once the Larsen & Toubro (L&T) brand is phased out. The work on the brand will start after the monsoon and it would become operational once the L&T brand is phased out by March next year.

Grasim will continue with its two major brands — Birla Super and Birla Plus — and some of its regional brands.

“We are looking at aggressive investments in the cement business. Grasim will be a conglomerate with two major business lines — VSF and cement. Cement will be the main growth engine,” said AV Birla Group chairman Kumar Mangalam Birla, at a press meet to announce the completion of the scheme of demerger of L&T’s cement business.

The boards of L&T and CemCo met on Tuesday and Grasim was formally handed over management control of CemCo.

Mr Birla will chair the CemCo board while Saurabh Misra will be the CEO. DD Rathi, Dr Santrupt Mishra, Ms Rajashree Birla and KC Birla will be on the board from the Birlas, YM Deosthalee and JP Nayak from L&T, S Rajagopal and MSK Khare from the financial institutions, while RC Bhargava and Arun Gandhi will be independent directors on the CemCo board.

With the transfer of the Grasim stake of 14.95 per cent in L&T to the L&T Employees’ Welfare Foundation, Mr Birla and Mrs Birla have stepped down from the L&T board.

Mr Birla said that there would be Rs 100 crore savings between the two companies on account of savings in logistics and procurement. “We have paid an aggressive price for the cement business and we will have to work hard to recover it. It will take two-three years to reach the rate of return,” Mr Birla added.

Re-iterating that it was a win-win situation for both sides, L&T chairman and managing director AM Naik said, “L&T will now become a focused engineering company with high-tech manufacturing and high-end construction. Grasim will prosper through a very competent workforce with operational skills.”

The L&T board is also being reconstituted with Suresh Talwar of Crawford Bayley and MP Chitale being proposed to be inducted as independent directors. L&T Infotech CEO VK Magapu will also be inducted on the board as an executive director.

The shareholding pattern in CemCo currently stands with the Birlas holding 51 per cent, L&T having 11.5 per cent, FIs with 12 per cent and the rest with retail and institutional investors.