One of the Adani group companies, Ambuja Cements, has signed a binding agreement to acquire a 46.8% stake in Orient Cement Ltd. (OCL) in two tranches of ₹8,100 crore as part of the cement major’s efforts to assist Ambuja in achieving the target of 100 million tonnes per annum (MTPA) by the financial year 2025.
Ambuja has topped Ultratech, the Aditya Birla Group’s company, in an open, competitive bid to win the deal for OCL. This is the third significant acquisition that Ambuja has made in the past one-and-a-half years since Holcim of Switzerland took it over in December 2018. In December last year, Ambuja acquired a majority stake in Sanghi Cement for ₹5,185 crore. And last August, it snapped up Penna Cement for ₹10,422 crore.
Ambuja made an open offer to the public shareholders of OCL for ₹395.40 as a part of the acquisition process, under the Securities and Exchange Board of India regulations in respect of Substantial Acquisition of Shares and Takeovers (SAST). The open offer has essentially resulted in the share purchase agreement, under which Ambuja procured 37.90 percent of the stake from the promoters of OCL while acquiring another 8.90 percent from other shareholders, leading to an acquisition of 26 percent of the expanded share capital through an open offer.
Orient Cement operates with a cement capacity of 5.6 MTPA and 8.5 MTPA. The acquisition adds an estimated 2 percent market share to the Adani Group in India’s cement sector. OCL has further acquired a concession from Madhya Pradesh Power Generating Company Ltd. to set up a cement grinding unit of 2 MTPA at the Satpura thermal power station in Sarni.
OCL also has a limestone mining lease at Chittorgarh, Rajasthan, where another 6 MTPA capacity can be built up in Northern India. According to Ambuja, these acquisitions supplement its cement operation and decrease lead distances and logistics costs.
The acquisition will be financed through internal accruals, and hence Ambuja would not bear any kind of debt. Adani said that the acquisition would strengthen its presence in core markets and increase its pan-India market share by 2 percent. He emphasized that OCL’s cost-efficient assets, including railway sidings and captive power plants backed by renewable energy, combined with its strategic locations and high-grade limestone reserves, present significant scope for future capacity expansion up to 16.6 MTPA.
C.K. Birla, Chairman of Orient Cement and the CK Birla Group said, “The CK Birla Group continues to re-allocate capital to sharpen its focus on consumer-centric, technology-driven, and service-based businesses. We believe that with the Adani Group’s strong focus on cement and infrastructure, it is a perfect new owner to continue the growth trajectory at Orient Cement for our people and stakeholders.”.
Amita Birla, Co-Chairman, of CK Birla Group, added here, “Orient Cement has a strong market position with sustainability initiatives that are particularly in renewable energy deeply set in its DNA. I am confident that Ambuja Cements is the right home for all our colleagues at Orient Cement as well as our customers.”
Ambuja plans further to optimize OCL’s capacity with improvements in cost efficiency, competitiveness, and overall operational performance.
