Ambuja Cements, owned by the Adani Group, announced on Thursday that its board has approved the merger with Adani Cementation, a subsidiary of Adani Enterprises. Once regulatory and shareholder approvals are obtained, Adani Cementation will become a wholly-owned subsidiary of Ambuja Cements.
Merger Details
The merger will be based on a share swap, with Adani Enterprises receiving 8.7 million shares of Ambuja Cements. The swap ratio is set at 174 shares of Ambuja Cements for every 1 share of Adani Cementation.
Benefits of the Merger
The merger aims to enhance operational efficiency and strengthen Ambuja Cements’ presence in coastal regions. It will provide better synergy as Adani Cementation has strategic locations near Dahej port and the Amba River in Raigad. This will help in sourcing clinker by sea and rail to serve the high-growth markets of South Gujarat and Mumbai. Additionally, Adani Cementation’s limestone resources will boost Ambuja’s consolidated limestone reserves.
Expansion Plans
Adani Cementation has acquired land to set up a 2.5 MTPA (million tonnes per annum) plant with a captive jetty at Amba River, Raigad, Maharashtra. It also commissioned a 1.30 MTPA cement grinding unit at Dahej, Gujarat in July 2023, with plans to expand by an additional 1.20 MTPA.
Competitive Advantage
The merger will give Ambuja Cements a competitive edge to serve the high-growth markets of South Gujarat and Mumbai through improved sea and rail logistics.
Adani Group’s Cement Ambitions
Led by billionaire Gautam Adani, the Adani Group has an installed capacity of 79 MTPA and aims to reach 140 MTPA by 2028. The group recently acquired Hyderabad-based Penna Cement, adding 14 MTPA to its capacity, and completed the acquisition of Sanghi Industries Ltd in December 2022.
Entry into Cement Sector
The Adani Group entered the cement sector in September 2022 by acquiring controlling stakes in Ambuja Cements from Swiss firm Holcim for USD 6.4 billion. Ambuja Cements holds a 51% stake in ACC Ltd. The Adani Group also launched a Rs 31,000 crore open offer to acquire an additional 26% stake from public shareholders.
Indian Cement Market
According to the Cement Manufacturers Association, India has an installed cement capacity of 541 MTPA. The market is led by UltraTech Cement Ltd, part of the Aditya Birla Group, with a consolidated capacity of 152.7 MTPA.