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The Board of Directors of UltraTech Cement has approved a Composite Scheme of Arrangement between Kesoram, UltraTech and their respective shareholders and creditors.

The decision was taken after considering the recommendation and report of the Audit Committee and the Committee of Independent Directors at the meeting held on Thursday.

Kesoram Industries Limited (Kesoram or Demerged Company) has decided to demerge its ‘Cement Business’ and has approached UltraTech Cement Limited (UltraTech or Resulting Company) in relation to the same.

The scheme provides for demerger of the Cement Business of the Demerged Company into the Resulting Company; and the reduction and cancellation of the preference share capital of the Demerged Company.

Post effectiveness of the scheme, fully paid-up equity shares and non-convertible redeemable preference shares of the Resulting Company shall be issued to the eligible shareholders of the Demerged Company.

The equity shares issued by the Resulting Company pursuant to the Scheme shall be listed on BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE).

Further, since fully paid-up non-convertible redeemable preference shares are being issued by the Resulting Company to the eligible preference shareholders of the Demerged Company, the existing preference share capital of the Demerged Company shall stand cancelled and reduced pursuant to the Scheme.

The Cement Business of the Demerged Company means the business of manufacture, production, sale and distribution of grey cement of the Demerged Company, and consists of two integrated cement units at Sedam (Karnataka) and Basantnagar (Telangana) with a total installed capacity of 10.75 mtpa and 0.66 mtpa packing plant at Solapur, Maharashtra.

The turnover of the Cement Business of the Demerged Company as on 31st March, 2023, was Rs. 3,517.45 crores and forms 99.54 per cent of the total turnover of the Demerged Company.

In case of the Demerged Company, the benefits are unlocking the value of the Cement Business for the shareholders of the Demerged Company; assisting in the de-leveraging of its balance sheet including reduction of debt and outflow of interest as well as creation of value for its shareholders; and focusing on core business areas such as rayon, transparent paper and chemicals.

This helps in expansion in markets where the Resulting Company has no physical presence; creating value for shareholders by acquiring ready to use assets which shall create operational efficiencies and reduce time to markets vis-à-vis greenfield projects which are time consuming on account of acquisition of land and limestone mining leases; good fit for serving existing markets and catering to additional cement volume requirements in new markets; the transaction will provide UltraTech the opportunity to extend its footprint in the highly fragmented, competitive and fast growing Western and Southern markets in the country.