Nov. 15 (Bloomberg) -- UltraTech Cement Ltd., a unit of India’s Aditya Birla Group, said it will absorb sister company Samruddhi Cement Ltd. to create the nation’s biggest and the world’s 10th largest maker of the building material.

Shareholders of Samruddhi will get four shares of UltraTech for every seven held in Samruddhi, according to an e-mailed statement in Mumbai. UltraTech said it will issue 149.5 million new shares to complete the program, which was approved by the boards of directors of the two companies today, boosting its capital to 2.74 billion rupees ($59 million). The Mumbai-based company’s output will increase to 48.8 million tons per year on merging with Samruddhi, according to the statement.

India’s cement makers are seeking to expand as the government aims to spend $500 billion by 2012 to build roads, ports and power plants to boost growth and incomes. The Aditya Birla Group said last month it plans to raise $3 billion in its cement business in the next five years to add 25 million metric tons to its 49 million ton annual capacity.

“The merger will achieve the group’s objective of consolidating its cement business into a single entity, thereby creating a platform for pursuing aggressive growth,” Chairman Kumar Mangalam Birla said, according to the statement.

The Aditya Birla Group started last month its plan to merge all its production and sales of the material into a single company by transferring the cement business of unit Grasim Industries Ltd. to Samruddhi. It bought the cement business of Larsen & Toubro Ltd., India’s biggest engineering company, in 2003 and named it UltraTech. The cement company made its trading debut in August 2004.

UltraTech shares have risen 28.6 percent in the past six months to 729.95 rupees in Mumbai trading. The benchmark Sensitive Index climbed 38.4 percent during the same period.

To contact the reporter on this story: Anil Varma in Mumbai at avarma3@bloomberg.net

Last Updated: November 15, 2009 06:50 EST