UltraTech Cement on December 6 said it received notice from the Competition Commission of India over the proposed acquisition of India Cements.
"UltraTech has received a communication from the Competition Commission of India (CCI) under Section 29 (1) of the Competition Act, 2002 regarding the proposed acquisition of The India Cements Limited (ICEM)," said the Aditya Birla Group company in a stock exchange filing.
The notice is a call to action for the parties involved to explain why an investigation into the combination should not be conducted. The parties must respond to the notice within 15 days.
UltraTech said it is confident of the merits of its case. "The Southern Market for grey cement, where ICEM primarily operates, is highly competitive and fragmented with the presence of over 35 grey cement manufacturers," said the company.
Mangesh Bhadang, Research Analyst at Centrum Broking Ltd, said: "We believe business combination in southern region will not have any adverse effect on competition given the highly fragmented nature of the region. In the past, CCI has given permission for business combination in other regions which are far less fragmented. We see this development as negative for consolidation of the industry as a whole. We await further details on this case for the time being.
UltraTech on July 28 announced to acquire 32.72% stake in India Cements from promoters and their associates for Rs 3,954 crore.
Before this, UltraTech had acquired a non-controlling stake of around 23% in ICL through two block deals, at around Rs 1,900 crore.
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