Mumbai, July 6: The process of demerger of the cement division of Larsen & Toubro was completed today. Grasim Industries has acquired a majority stake in UltraTech Cement Co Ltd (UltraTech), the demerged cement business of L&T.

Grasim Industries is now looking at consolidating the operations of UltraTech, following which it would look at various options to raise its cement production capacity, including brownfield expansion, growing inorganically or a greenfield venture.

The AV Birla group company would launch a cement brand next year, which will replace the existing L&T brand. Grasim is looking at having two national brands apart from two to three regional brands.

Currently, the group has cement brands like Birla Super and Birla Plus apart from few regional brands that have a strong presence in their respective markets.

Kumar Mangalam Birla, chairman, Aditya Birla group, said the transfer of L&T’s cement business reflects the group’s commitment to the sector.

“We want to be a dominant player,” he said, adding that there is a huge potential for this business in the country.

Birla pointed out that while consumption of cement in India is one-fourth to that of China, it has come a long way. While demand for cement in the country is placed at 117 million tonnes with the industry clocking an 8 per cent average growth rate over the past few years, consumption of the commodity is expected to touch 200 million tonnes by the turn of this decade.

“So we have to invest ahead of the market. We are looking aggressively at the cement business as it will be the growth engine for Grasim,” Birla said.

When asked about his specific plans for UltraTech that has five integrated plants, five grinding units and four terminals, Birla said while it has done a good job in de-bottlenecking, there is scope to do more.

With UltraTech now under its belt, Birla divulged that the group is looking at saving Rs 100 crore between the two companies. This is due to economies of scale, sharing best practices and common procurement apart from logistics sharing.

The group has set an internal target of 15 per cent return on capital from the acquisition of L&T’s cement business. It would take two to three years to reach that level, Birla said.

Earlier, A. M. Naik, chairman and managing director of L&T, said the transaction has helped unlock value for its shareholders and position the demerged business as a focussed engineering, construction and technology company.

He added that L&T would now concentrate on hi-tech areas, including nuclear, aerospace and defence.