UltraTech Cement Ltd has outlined plans to achieve a strategic turnaround for India Cements Ltd (ICL) within the next 12 months, focusing on performance improvements starting January 2025. As the new majority stakeholder in India Cements, UltraTech intends to implement targeted measures such as debottlenecking at key plants and expanding operations at select locations, to steer the Chennai-based cement maker — now a subsidiary — to profitability.
India Cements, which became a subsidiary of UltraTech on December 24, 2024, reported a loss of ₹429 crore for the December 2024 quarter, compared to a ₹17 crore loss in the same period last year. Net sales fell to ₹903 crore from ₹1,082 crore. For the nine months of this fiscal, the company recorded a net loss of ₹592 crore (up from a net loss of ₹173 crore in Q3FY24), with net sales dropping to ₹2,891 crore from ₹3,697 crore.
UltraTech is actively working with its team at India Cements to identify growth opportunities. Initial reviews have revealed potential debottlenecking opportunities at three plants and expansion prospects at two or three additional sites. The company aims to enhance ICL’s performance within 12 months, beginning January 2025, the management of UltraTech said during its Q3FY25 earnings call.
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The investment will be required for waste heat recovery systems (WHRS), which are expected to yield returns over time. “If work begins in January 2025, we expect to see benefits by the October–December 2026 quarter. We anticipate some improvements by the end of FY25, with further enhancements once efficiency-driven capital expenditure (CapEx) programmes are completed,” the management added.
India Cements operated at around 57% capacity utilisation in the last quarter, highlighting a clear opportunity to improve this metric across its total capacity of 14.45 million tonnes — 13 million tonnes of which are in the South and 1.5 million tonnes in the North.
The company is also considering return-based capital expenditure, although UltraTech noted that it has only been involved with ICL since December 25, 2024. The company expects to finalise its comprehensive strategy within a quarter.
UltraTech’s recent open offer for India Cements concluded on January 21, saw a subscription of 110 per cent at ₹390 per share. As a result, UltraTech now holds 81.49 per cent equity in India Cements. However, to comply with regulatory requirements, it will reduce its stake to 75 per cent within the prescribed timelines, bringing the average cost of equity to ₹359 per share.
As of December 31, 2024, India Cements’ net debt stood at ₹877 crore, with an enterprise value of ₹12,075 crore for a 14.45 million tonne capacity. The dollar-per-tonne acquisition cost is well below $100, contrary to earlier speculation of $120. Additionally, the debt will be reduced through cash generated from non-core assets, the management said.
On the branding front, UltraTech confirmed there is no ongoing cricket partnership. The CSK (Chennai Super Kings) association was separated some time ago, and there are no IPL-related ties at present. India Cements will continue to own and manage brands like CSK Cement, but there will be no future cricket-related sponsorships or partnerships.
