Engineering and construction major Larsen and Toubro has made a little over Rs 1,000 crore profit through sale of its residual stake in UltraTech Cement.
L&T on Thursday sold 14.3 million UltraTech shares, representing 11.49 per cent stake, at an average price of Rs 725 each for Rs 1,037 crore. These shares were retained by L&T when it sold its cement business to the Aditya Birla Group in 2004 and were shown on its books at Rs 10 each as of March 2008 (the latest annual report is not available as yet). The same number of shares has been now sold.
L&T had exited its cement business through a demerger and sale to Grasim in 2004. It had retained the 11.49 per cent stake in Ultratech with a commitment to sell the same on or before December 31, 2009.
The sale of its complete stake in UltraTech Cement is in accordance with L&T’s obligations under its agreement with Grasim, and is also in line with its strategy of focusing on its core business. In its efforts to get the best value for its shareholders, the company decided that the present market conditions were right for the disinvestment of the residual holding, a company spokesman said.
Sources said the stake was picked up by a number of institutional investors. The Aditya Birla Group, which has the first right of refusal to buy the shares, did not participate.
In 2004, L&T transferred its 16-million-tonne cement division to Grasim Industries of the Aditya Birla group. The L&T Employees Trust bought out 14.95 per cent of L&T shares for Rs 446 crore from Grasim, while L&T sold its 8.5 per cent holding of cement shares to Grasim for Rs 336 crore. Five years after inking the deal, L&T has seen UltraTech share appreciate over 330 per cent from about Rs 171 to Rs 735.
Source: Economic Times