Ambuja Cements on Thursday said its board has approved the merger of Adani Cementation, which is now a subsidiary of Adani Enterprises. After the approval of the Scheme of Amalgamation of Adani Cementation, after regulatory and shareholders approval, it would become a wholly-owned subsidiary.
The merger is totally based on share swapping and Adani Enterprises will get 8.7 million shares of Ambuja Cements.
The consolidation of cement capacities within 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 Ltd for every 1 share of Adani Cementation Ltd (ACL),” it said.
Adani Cementation Ltd is wholly owned by Adani Enterprise Ltd.
This will help in a better synergy for Ambuja Cements as ACL’s presence at strategic locations near Dahej port and Amba River – Raigad. It will enable source clinker by Sea as well as Rail to serve high growth market of South Gujarat and Mumbai.
Besides “ACL’s limestone resource to further enhance Ambuja’s consolidated limestone reserves,” said a merger transaction brief shared by Ambuja to bourses.
ACL has acquired land to set up 2.5 MTPA (million tonnes per annum) along with captive jetty at Amba River, Raigad (Maharashtra).
Besides, it has commissioned 1.30 MTPA cement grinding capacity at Dahej, Gujarat in July 2023, where expansion is in progress for another 1.20 MTPA.
The merger will also provide “competitive advantage” to Ambuja Cements to serve high growth market of South Gujarat by Dahej and Mumbai market by Raigad through sea logistics as well as rail, it added.
Billionaire Gautam Adani-led company has an installed capacity of 79 MTPA. The growth-hungry group has an ambition to have 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 this month, which will add 14 MTPA, taking its capacity to 93 MTPA.
The Adani group in last December completed the acquisition of Saurastra-based Sanghi Industries Ltd, at an enterprise value of Rs 5,185 crore.
Adani Group entered into the cement sector in September 2022, after acquiring controlling stakes in Ambuja Cement from Swiss firm Holcim for cash proceeds of USD 6.4 billion (about Rs 51,000 crore). Ambuja Cements owns a 51 per cent stake in ACC Ltd.
Later it also launched a Rs 31,000 crore open offer for the acquisition of 26 per cent additional stakes from public shareholders.
According to data from the Cement Manufacturers Association, the country has installed a cement capacity of 541 Metric Tonnes (MT). The Indian cement market is led by Aditya Birla group firm UltraTech Cement Ltd, which has a consolidated capacity of 152.7 MTPA.