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Grasim gets bullish on cement — L&T hands over UltraTech management

Our Bureau

Mumbai , July 6

NOT content with acquiring majority stake in UltraTech CemCo from Larsen & Toubro at a total cost of Rs 2,200 crore, Grasim Industries appears to still have reserves of appetite for cement.

"We are looking at more aggressive investments in the cement sector," said Mr Kumar Mangalam Birla, Chairman of the Aditya Birla group, speaking at the formal handover of the management of UltraTech by Larsen & Toubro to Grasim on Tuesday.

"This means we will in-principle look at all options — brownfield and greenfield ventures — as well as inorganic growth," said Mr Birla.

UltraTech will be listed on the stock exchanges in a few days' time, after the BSE gets certain approvals on the issue from SEBI, he said.

With the 30 per cent open offer for UltraTech going through successfully, the AV Birla group now has 51 per cent stake in UltraTech, 12 per cent remains with the financial institutions, 11.5 per cent with L&T, and remainder with other institutions and individuals.

The Board of UltraTech would, apart from Mrs Rajshree Birla and Kumar Mangalam Birla, comprise Mr Y.M. Deosthalee and Mr J.P. Nayak from L&T, Mr D.D. Rathi and Dr S Misra from the AV Birla group, two independent directors - Mr R.C. Bhargava and Mr Arun Gandhi, and two nominees from financial institutions.

Dr Misra, has been appointed CEO of UltraTech, and Mr K.C. Birla (also for the AV Birla group) has been appointed Chief Financial Officer.

Mrs Birla and Mr Birla have also stepped down from the Board of L&T; they are being replaced by two others, said Mr. A.M. Naik, Chairman and Managing Director of L&T.

Grasim has the permission to sell UltraTech Cemco's branded cement as `L&T Cement' until March 31, 2004.

However, after the monsoons, the brand will be rechristened.

"This will of course be a national brand. Then we have our Birla brand. And we will also continue with the two or three regional brands that we have which are doing very well," said Mr Birla.

The benchmark return on capital employed of 15 per cent aimed at by the Birlas will be the target for UltraTech too, but it is at least three years away, he said.

"We believe that it will take about two to three years for UltraTech to provide a competitive return on the aggressive price offered to its shareholders."

A savings of at least 100 crore per annum is possible out of the consolidation of certain activities and sourcings by both UltraTech and Grasim's cement division, said Mr. Birla.

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