UltraTech Cement Ltd has entered into an Energy Supply Agreement and Share Subscription and Shareholders Agreement to acquire a 13.99% equity stake in FPEL Services Pvt. Ltd., according to reports from CNBC TV18 and Business Standard. The target company is engaged in the generation and transmission of renewable energy through wind power. As per the latest company filing, UltraTech Cement will invest ₹12.09 crore to acquire the 13.99% stake in FPEL Services. Separately, The India Cements Ltd, a subsidiary of UltraTech Cement, has also entered into similar agreements to acquire a 12.48% equity stake in FPEL Services for ₹10.78 crore. The proposed acquisition is not a related-party transaction, and neither the promoter nor promoter group entities have any interest in the target company, as confirmed by UltraTech in its filing.
The acquisition allows UltraTech to procure renewable energy under the 'Group Captive' model, which provides significant savings on electricity duties and surcharges compared to standard industrial grid power. Power and fuel costs typically make up 25-30% of cement production costs, and by increasing renewable share, UltraTech can reduce its power tariff by ₹1-2 per unit, positively impacting EBITDA per tonne. The 13.99% stake allows the company to benefit from the 'Group Captive' status under Indian Electricity Rules, enabling long-term price stability against fluctuating coal and petcoke prices that usually constitute over 25% of total expenditure. As per the company's latest statement, the acquisition is aimed at meeting its green energy requirements, optimising energy costs and complying with regulatory requirements for captive power consumption under electricity laws.
UltraTech Cement had reported a 21.2% growth in net profit for the March quarter to ₹3,000 crore, which was higher than the CNBC-TV18 poll of ₹2,749 crore, according to CNBC TV18 reports. The company's Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter also grew by 21.3% on a year-on-year basis to ₹5,600.5 crore, which exceeded the projected figure of ₹5,194 crore from the CNBC-TV18 poll.
The transaction is expected to be completed within 180 days from the execution of the Energy Supply Agreement and the Share Subscription and Shareholders Agreement, as confirmed by UltraTech in its latest filing. Shares of UltraTech Cement closed at ₹10,860 on the NSE on June 10, down ₹51 or 0.47% from the previous close, as reported by CNBC TV18. The stock movement occurred despite the company's strong quarterly financial performance and strategic renewable energy acquisition announcement. In the last 60 days, UltraTech has commissioned 100 MW of solar power in Rajasthan and announced a massive ₹32,000 crore capex plan to expand capacity to 200 MTPA, while also reporting a 12% YoY growth in volumes for the previous quarter.
