Ambuja Cements acquires 47% stake in Orient Cement for Rs 81 Bn
23 Oct 2024 CW Team
Ambuja Cements, the cement and building material company of the diversified Adani Group, announced to acquire Orient Cement Ltd (OCL) at an equity value of Rs 81 billion. Ambuja will acquire 46.8 % shares of OCL from its current promoters and certain public shareholders and the acquisition will be fully funded through internal accruals, the company said in a statement.
The acquisition of OCL complements Ambuja's existing cement footprint, reducing overall lead distances and logistics costs for the cement business and improving market share in our core markets, it said. "This timed acquisition marks another significant step forward in Ambuja Cements' accelerated growth journey, increasing cement capacity by 30 million tonnes per annum (MTPA) within two years of Ambuja's acquisition," said Karan Adani, Director of Ambuja Cements.
"By acquiring OCL, Ambuja is poised to reach 100 MTPA cement capacity in FY25. The acquisition will help to expand Adani Cements' presence in core markets and improve its pan-India market share by 2 % ," Karan Adani added.
OCL has 5.6 MTPA clinker capacity and 8.5 MTPA cement capacity, along with statutory clearance to increase the clinker capacity by another 6.0 MTPA and cement capacity by another 8.1 MTPA. In addition, OCL also has a limestone mining lease in Chittorgarh for setting up an Integrated Unit (IU) with clinker of 4 MTPA and a split Grinding Unit (GU) of 6 MTPA in North India.
"OCL's assets are highly efficient, equipped with railway sidings and well supported by captive power plants, renewable energy, WHRS and AFR facilities. OCL's strategic locations, high-quality limestone reserves and requisite statutory approvals present an opportunity to increase cement capacity in the near term to 16.6 MTPA," said Karan Adani.
OCL has secured a concession from MPPGCL, Madhya Pradesh for setting up a Grinding Unit within the premises of the Satpura Thermal Power Plant. Both these complement the Adani Group's existing cement footprint.
CK Birla, Chairman of Orient Cement and the CK Birla Group, said they are confident that the Adani Group, with its strong focus on cement and infrastructure, is the ideal new owner to drive continued growth at Orient Cement for our people and stakeholders.
Ambuja, with its subsidiaries ACC Ltd, Penna Cement Industries Ltd and Sanghi Industries Ltd, has taken the Adani Group's cement capacity to 88.9 MTPA, with 20 integrated cement manufacturing plants, 20 cement grinding units and 12 bulk terminals across the country.