Adani's Ambuja Cements to Acquire Stakes in Orient Cement

Adani-backed Ambuja to buy 46.8% stake in Orient Cement for Rs 8,100 cr. The Adani family-owned Ambuja Cements Ltd has signed a binding agreement for purchasing 46.8% of the entire paid-up equity share capital of Orient Cement Ltd for an investment worth Rs 8,100 cr.

This acquisition by the CK Birla-owned company puts it further on the path to attaining the target capacity of 140 million tonnes a year by 2030. With this, Ambuja has pipped Ultratech, an Aditya Birla Group firm, which was also in the fray to buy the company.

The Adani Group had acquired Sanghi Cement in the last December and further developed its cement business portfolio this year with the acquisition of Penna Cement for Rs 10,422 crores in June.

Ambuja will make an open offer for the public shareholders of Orient Cement at Rs 395.40 per equity share under Sebi's SAST Regulations.

Ambuja will buy 37.90% stake from the promoters and will also acquire 8.90% of existing share capital on completion basis through Other SPA. After successful execution of the open offer, assuming full acceptance in the offer, it will also acquire 26% of the expanded share capital.

It houses cost-effective capacity expansion of 5.6 MTPA clinker and 8.5 MTPA cement with capacity utilization besides 95 MW CPP, 10 MW WHRS and 33 MW Renewable Energy at Telangana, Karnataka and Maharashtra. With this acquisition, the market share of the Adani Group in the cement industry will go up to 2 percent pan-India.

OCL has been conferred with a concession by MPPGCL to establish a 2.0 MTPA Cement Grinding Unit (GU) at Satpura Thermal Power Station, Sarni, Madhya Pradesh.

Substantial high-grade limestone mining leases have also been held by the company at Chittorgarh, Rajasthan. This will easily facilitate another 6 MTPA capacity in North India.

OCL acquisition complements the existing cement footprint of Ambuja; reduces overall lead distances and logistics cost for the cement business; and increases market share in core markets.

Ambuja will fund this acquisition entirely from internal accruals and therefore remain debt-free.

This strategic acquisition is another step in the fast journey of growth for Ambuja Cements. In two years of acquisition, about 30 MTPA gets added to cement capacity. Commenting on this, Ambuja's Director Karan Adani said, ". "The acquisition of OCL will position Ambuja to take cement capacity to 100 MTPA by FY25. The acquisition will add on to the presence of Adani Cement in core markets and advance the pan-India market share by 2 percent." OCL's assets have high efficiency as they are enabled with railway sidings and captive power plants, renewable energy, WHRS, and AFR facilities. Strategic locations, high-quality limestone reserves, and requisite statutory approvals; hence, an opportunity exists for near-term cement capacity augmentation to 16.6 MTPA. The CK Birla Group continues to re-optimize its capital allocation to sharpen focus on consumer-centric, technology-driven, and service-based businesses.

I am proud of the strong track record that Orient Cement has established in creating premium brands and sustaining leadership market share in geographies it operates in, said CK Birla, Chairman of Orient Cement and the CK Birla Group. The Adani Group would be an excellent new owner with its strong credentials in cement and infrastructure for continued growth at Orient Cement for our people and stakeholders,,. Orient Cement is deeply ingrained in the markets, and sustainability initiatives - not just renewable energy, but anything-under-sun-, are part of its DNA. "We are confident that Ambuja Cements is just the right home for all our colleagues at Orient Cement as much as it is for our customers," said Amita Birla, Joint Chairman, CK Birla Group.

OCL has clinker capacity of 5.6 MTPA and cement capacity of 8.5 MTPA with statutory clearances available to add 6.0 MTPA in clinker capacity and another 8.1 MTPA in cement capacity. OCL has limestone mining lease in Chittorgarh for establishing an Integrated Unit (IU) having clinker capacity of 4 MTPA along with a Split Grinding Unit (GU) of 6 MTPA in North India.

It has also ensured a concession from MPPGCL at Madhya Pradesh for a Grinding Unit to be set up within the Satpura Thermal Power Plant premises. Both these developments complement and enhance cement presence in the operations carried out in the present through the Adani Group.

Recently, OCL has commissioned a WHRS in its Chittapur IU and is soon at the threshold of commissioning 16 MW of solar power at Chittapur and 3.7 MW of solar power at Jalgaon.

The cement business that exists in the Adani Group would be highly enhanced by the efficient plants and motivated teams, the strong balance sheet, and the well-distributed dealer network of OCL. The dealers of OCL are likely to get integrated into the market network of Adani Cement and significant synergies are going to be reaped. Ambuja has proposed to achieve best-in-class overall capacity utilization from OCL to make it more cost competitive and improve operating performance while extracting the synergy benefits that would be offered by the cement business.