Displaying items by tag: Ambuja Cements

India: Adani Group has successfully acquired Holcim’s assets in Indian for US$6.4bn. Holcim says that the transaction will facilitate the on-going implementation of its acquisition strategy, to build on investments of US$5.19bn in its solutions and products business so far in 2022.

Holcim chief executive officer Jan Jenisch said “I would like to thank our 10,700 Indian colleagues who have played an essential role in the development of our business over the years with their relentless dedication and expertise. I am convinced that the Adani Group is the right home for them as well as for our customers to continue to thrive in the future. This divestment is another step in our transformation to become the global leader in innovative and sustainable building solutions, strengthening our balance sheet and giving us the firepower to continue our acquisition strategy.”

India: Gautam Adani, his son Karan Adani and his nephew Pranav Adani are all expected to join the boards of ACC and Ambuja Cement. Sources quoted by the Mint newspaper anticipated changes to the boards of both companies to start happening in mid-September 2022. At the same time, a number of existing board members of the subsidiaries of Switzerland-based Holcim are expected to resign. Adani Group’s US$10.5bn acquisition of the subsidiaries of Switzerland-based Holcim has been gathering pace, with the latter having completed its due diligence process and the mandatory open offers for the public shareholders finished.

India: ACC and Ambuja Cements shareholders tendered some of their shares under a US$3.8bn open offer by Adani Group for a further 26% stake in each company. The offer closed on 9 September 2022, and the group secured ownership of a further 2.2% stake in ACC and a further 0.4% stake in Ambuja Cements.

Adani Group agreed to acquire Switzerland-based Holcim’s 50% ACC stake and 63% Ambuja Cements stake for US$10.5bn in May 2022.

India: The Adani Group is likely to launch an US$3.8bn open offer to acquire a 26% stake in each of Holcim's two Indian listed entities, Ambuja Cements and ACC, from public shareholders. The group announced that it had clinched a deal to acquire a controlling stake in the businesses for US$10.5bn in May 2022.

As per the revised schedule submitted by ICICI Securities and Deutsche Equities India, the managers of the open offer, tendering of the shares in the open will start from 26 August 2022 and end on 9 September 2022.

India: The Competition Commission of India (CCI) has approved Adani Group’s US$10.5bn deal to acquire Holcim’s Indian business. Holcim holds a 63% stake in Ambuja Cements, which holds a 50% stake in ACC. Holcim also holds a direct 4.5% stake in ACC.

Adani Group launched a new company, Endeavour, to assume ownership of the new share capital from Holcim’s holding company Holderind Investments.

India: Holcim subsidiaries ACC and Ambuja Cements, along with Dalmia Cement, Shree Cement, UltraTech Cement and 15 other Indian cement producers, have violated antitrust laws through price collusion and supply restriction, a Competition Commission of India (CCI) investigation has uncovered. Reuters News has reported that regular price rises in the Indian cement market were the outcome of collusion between producers, which set target prices by district and carried out twice weekly inspections of participant companies’ operations. Senior executives from ACC and UltraTech Cement, among other companies, served as state-wide coordinators. They planned and carried out their deception by means including messaging platform WhatsApp.

ACC and UltraTech Cement, along with ACC’s fellow Holcim subsidiary Ambuja Cements, declined to comment, however Holcim said “The Indian companies are managing this matter responsibly and we expect them to continue to do so accordingly."

India: Ambuja Cements' sales were US$495m in the first quarter of its 2023 financial year, up by 18% year-on-year from first-quarter 2022 financial year levels. Its net profit rose by 45% to US$131m from US$90.4m.The company said that it experienced rising fuel prices and related inflationary impacts during the quarter. It mitigated their impacts through the improved efficiencies delivered under its I Can operating strategy. Meanwhile, its master supply agreement with ACC also helped to restrict growth in transport costs.

Holcim India chief executive officer (CEO) and Ambuja Cements managing director and CEO Neeraj Akhoury said "Ambuja has recorded robust volume growth of 15% and top line growth of 18%. Ambuja Kawach, our green cement, demonstrated a sales growth of 22% year on year."

We return to India to discuss a potential fight that may be brewing in the cement sector. Competition between UltraTech Cement and Adani Group started when the latter won the race to buy Holcim’s cement assets in the country in May 2022. However, the rivalry stepped up a notch this week when UltraTech Cement responded by approving a US$1.7bn investment for expansion.

The leading Indian producer announced that it was committing the funds towards increasing its cement production capacity by 22.6Mt/yr. This will include a mixture of expansions to existing sites and building new plants such as new integrated units, new grinding units and new terminals. UltraTech Cement currently has a previous round of expansion that is set to be completed by the end of the 2023 financial year. Commercial production at the newly announced projects is forecast to start by the end of the 2025 financial year. The company finished off by saying that the upgrade projects would maintain its position as the third largest cement producer outside of China, with its total production capacity rising to 159Mt/yr.

Unusually for these kinds of press releases though, UltraTech Cement made of point of doing the calculation for any readers who might want to know how much this new capacity might cost. It is US$76/t. Adani Group didn’t do this when it said it had agreed to buy Ambuja Cements and ACC from Holcim but, unsurprisingly, it cost more, at least US$94/t based on the cash figure Holcim released for the deal. Note that Adani Group has valued the acquisition at US$10.5bn, which would put the capacity cost up to US$150/t. Other zingers in the press release included Kumar Mangalam Birla’s quote that his company held, “... a deep and nuanced understanding of the market dynamics of the cement industry.” Both of these additions to the statement suggest that UltraTech Cement is making a point about its new competitor.

Bloomberg has framed the actions of UltraTech Cement and Adani Group in the cement sector as a brewing corporate battle between old and new money. Both Kumar Mangalam Birla, chair of Aditya Birla Group - the owner of UltraTech Cement, and Gautam Adani were in the top 10 of the Forbes list of the richest people in India in 2021. Birla comes from inherited wealth, although he has undeniably expanded UltraTech Cement greatly during his tenure as chair. Adani is self-made. Cement is just part of the empires of both men but one risk to UltraTech Cement is just how fast an expansion-driven competitor with concerns in power generation and logistics might decide to try to shake up the cement sector.

It is interesting at this early stage to glimpse part of the potential strategies both cement companies may be employing. Adani Group is in the process of buying its way into the cement sector at a relatively high price for capacity. UltraTech Cement is responding by building new capacity at a lower price. Research by Kotak Institutional Equities cited in the Bloomberg article suggests that Adani Group could increase its 70Mt/yr capacity up to 100Mt/yr at US$80 – 90/t. This would cost up to around US$2.5bn but it’s not impossible. Kotak also reckons UltraTech Cement can eke out around US$3 – 4/t more in earnings before interest, taxation, depreciation and amortisation (EBITDA) compared to the existing Ambuja Cements and ACC assets. Adani Group might be able to cut this gap down through creating synergies by further merging the two companies.

This adds to the feeling that UltraTech Cement is in a stronger position as the incumbent market leader. Yet risks abound in the current inflationary conditions and even less is certain if Adani Group is prepared to invest heavily enough. After all, UltraTech Cement had a production capacity of only 23Mt/yr in 2010. Less than a decade later it became India’s largest cement producer. It is now Adani Group’s next move in the battle of the cement billionaires.

India: The National Bank for Agriculture and Rural Development (NABARD) has entrusted Ambuja Cement Foundation with responsibility for a new watershed development project in Himachal Pradesh’s Mandi District. The work will support local farmers in increasing their production and productivity. It will be the 10^th such project that Ambuja Cement Foundation has executed.

Director and CEO Pearl Tiwari said “Ambuja Cement Foundation has a long-standing relationship with NABARD, and we have been working together on watershed development in Himachal Pradesh for the past 14 years. With this new project, we are once again working to empower farmers of another district in the hilly region.”

India: Holcim India subsidiary ACC has announced that industrial conglomerate Adani Group's open offer for Holcim's Indian business will open on 6 July 2022 and conclude on 19 July 2022. Live Mint News has reported that the parties expect the deal to subsequently close within 2022.