Business: Gautam Adani’s company gets big approval

Business : The merger is entirely based on share swapping and Adani Enterprises will get 8.7 million shares of Ambuja Cements. Adani Group-owned Ambuja Cements on Thursday said its board has approved the merger of Adani Cementation, which is now a subsidiary of Adani Enterprises. Once the scheme of merger of Adani Cementation is approved after regulatory and shareholders approval, it will become a wholly-owned subsidiary. The merger is entirely based on share swapping and Adani Enterprises will get 8.7 million shares of Ambuja Cements. The integration of cement capacities within the Adani Group is to “enhance operational efficiency” and strengthen Ambuja Cements’ coastal footprint. The scheme has a “swap ratio of 174 shares of Ambuja Cements Limited for every 1 share of Adani Cementation Limited (ACL)”. Adani Cementation Limited is wholly owned by Adani Enterprise Limited.

This will help create better synergies for Ambuja Cements as ACL has presence at strategic locations near Dahej port and Amba River – Raigad. This will enable clinker source by sea as well as rail to serve the high growth market of South Gujarat and Mumbai. Further, “ACL’s limestone resources will further enhance Ambuja’s consolidated limestone reserves,” said a brief description of the merger transaction shared by Ambuja to the stock exchanges. ACL has acquired land to set up a 2.5 MTPA (million tonnes per annum) with captive jetty at Amba River, Raigad (Maharashtra). Further, it has commissioned 1.30 MTPA cement grinding capacity at Dahej, Gujarat in July 2023, where expansion work for 1.20 MTPA is in progress. The merger will also give Ambuja Cements a “competitive advantage” to serve the high-growth market of Dahej in south Gujarat and Raigad market in Mumbai through marine logistics as well as rail. The company, led by billionaire Gautam Adani, has an installed capacity of 79 MTPA.

The growth-minded conglomerate has ambitions of achieving a capacity of 140 MTPA by 2028. Earlier this month, it announced the acquisition of Hyderabad-based Penna Cement at an enterprise value of Rs 10,422 crore, which will add 14 MTPA, taking its capacity to 93 MTPA. The Adani Group completed the acquisition of Saurashtra-based Sanghi Industries Limited at an enterprise value of Rs 5,185 crore last December. The Adani Group entered the cement sector in September 2022 after acquiring a controlling stake in Ambuja Cement from Swiss firm Holcim for cash proceeds of USD 6.4 billion (about Rs 51,000 crore). Ambuja Cements holds a 51 per cent stake in ACC Ltd. It later also launched an open offer of Rs 31,000 crore to acquire an additional 26 per cent stake from public shareholders. According to data from the Cement Manufacturers Association, the country has an installed cement capacity of 541 metric tonnes (MT). The Indian cement market is led by Aditya Birla Group firm UltraTech Cement Ltd, with a consolidated capacity of 152.7 MTPA.