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UltraTech to acquire 51% of Star Cement

World Cement,

Sources from India report that the Indian conglomerate Aditya Birla Group, whose interests range from aluminium to mobile services, is acquiring a 51% stake in Star Cement through UltraTech, its cement business arm. The Dubai-based cement company, which is part of the ETA Group, owns cement plants in Dubai, Sudan, Bangladesh and Bahrain with a total capacity of 3.8 million t.

The deal will provide the Indian major access to the expanding markets In Bangladesh, Bahrain and Sudan. Clinker will be transported from India into the region. Star Cement has a 0.5 million t bulk cement terminal in Sudan.

A report from Fitch Ratings India Pvt Ltd  in January 2010 suggested that the Indian cement industry will see a lot of activity this year, where the larger firms could lose market share to smaller regional companies and margins come under pressure. Domestic cement makers are likely to add 50 million t of capacity this year to take the country’s installed capacity to 300 million t. It seems that a significant amount of the additional capacity will come from plants located in Southern India, owned by smaller companies with annual capacities of 2 to 3 million tpa. By the end of 2010 smaller companies are expected to control 51% of the market up from 40% just over a year ago.

The Aditya Birla Group has announced that it will invest up to Rs. 16 000 crore in the cement business over the next five years to add 25 million t of capacity and maintain  its market share of 19%. It is also said that UltraTech and Samruddhi will merge, making the group’s cement company the largest in India with 49 million t capacity.

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