Ambuja Cements Board Approves Merger with Adani Cementation

By siliconindia  |  Friday, 28 June 2024, 09:29:38 AM IST

Ambuja Cements Board Approves Merger with Adani Cementation
In a significant development, Ambuja Cements, a key entity of the Adani Group, announced the approval of its board for the merger of Adani Cementation Ltd with the company. Adani Cementation, presently a subsidiary of Adani Enterprises, will transition into a wholly-owned subsidiary of Ambuja Cements once the Scheme of Amalgamation gains regulatory and shareholder approvals.
The merger is designed on a share swap basis. Under this arrangement, Adani Enterprises will receive 8.7 million shares of Ambuja Cements in exchange for its holdings in Adani Cementation. The specified swap ratio is 174 shares of Ambuja Cements for each share of Adani Cementation. This strategic move aims to enhance operational efficiency and fortify Ambuja Cements’ footprint along India’s coastal regions.
The integration of Adani Cementation is poised to significantly augment Ambuja Cements’ operational capabilities, particularly due to Adani Cementation’s strategic assets near Dahej Port in Gujarat and the Amba River in Raigad, Maharashtra. These locations are expected to facilitate efficient sea and rail logistics for clinker sourcing, thus better serving the burgeoning markets of South Gujarat and Mumbai.
Furthermore, the merger is set to boost Ambuja’s limestone reserves, vital for cement production. Adani Cementation has already acquired land to establish a 2.5 million tonnes per annum (MTPA) cement plant along with a captive jetty at Amba River. Additionally, it has commissioned a 1.3 MTPA cement grinding unit at Dahej, with plans for a further 1.2 MTPA expansion.
Ambuja Cements highlighted that this merger would provide a competitive edge by optimizing logistics and accessing strategic markets. The consolidation is expected to lead to better synergies and operational efficiencies, crucial for the company’s growth in high-demand regions.
This merger aligns with the Adani Group’s ambitious expansion strategy in the cement sector. Currently, Ambuja Cements has an installed capacity of 79 MTPA and aims to scale up to 140 MTPA by 2028. The group’s recent activities reflect this aggressive growth trajectory, including the acquisition of Hyderabad-based Penna Cement at an enterprise value of Rs 10,422 crore. This acquisition, adding 14 MTPA, will bring Ambuja’s capacity to 93 MTPA. This follows the December acquisition of Sanghi Industries Ltd in Saurashtra for Rs 5,185 crore.
Adani Group’s entry into the cement industry began in September 2022 with the acquisition of controlling stakes in Ambuja Cements from the Swiss firm Holcim, a deal valued at approximately USD 6.4 billion (about Rs 51,000 crore). Ambuja subsequently launched a Rs 31,000 crore open offer to acquire an additional 26% stake from public shareholders. Ambuja Cements also holds a 51% stake in ACC Ltd, enhancing its competitive positioning in the market.
The Indian cement industry, which boasts a total installed capacity of 541 MTPA according to the Cement Manufacturers Association, is led by UltraTech Cement Ltd with a capacity of 152.7 MTPA. Adani Group’s strategic moves through acquisitions and expansions underscore its commitment to becoming a formidable player in this sector, capitalizing on synergies from its wide-ranging assets and investments.

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