Adani Group’s Nuvoco buy-out may not pass CCI muster
Company News

Adani Group’s Nuvoco buy-out may not pass CCI muster

Adani Group may not be able to swing the buy-out of Nirma group’s Nuvoco if the Competition Commission of India (CCI) were to strictly go by the threshold for mergers and acquisitions (M&A) transactions clearing.

The latest report from Jefferies on consolidation in the cement sector in India said that Adani may find it challenging to obtain the CCI approval for the Nuvoco buys based on the metric used by the competitor watchdog to pass or disallow M&A transactions.

Adani Group may be looking for a new purchase after buying out Holcim’s stake in ACC and Ambuja Cement. The next target was supposed to be Nuvoco.

CCI considers the Herfindahl Hirschman Index (HHI) when clearing acquisitions. The index is a measurement of market concentration, and it is applied to witness the extent to which a merger and acquisition (M&A) will improve concentration and weaken competition.

According to Jefferies, any M&A resulting in HHI surpassing 2,000 may face hindrances from the CCI, and merging Ambuja-ACC with Nuvoco gets the index close to uncomfortable levels.

For FY23, HHI for the Eastern region would move to 1945 from 1498 if we merge Ambuja and ACC with Nuvoco. It is a close number to Holcim Lafarge combination estimation where CCI felt it would be appropriate for Lafarge to divest, said the report.

In 2014, when Holcim and Lafarge announced their global merger, the competition watchdog in India had asked the combine to divest some of the assets in the country. In 2016, CCI approved the divestment by LafargeHolcim (now Holcim Ltd) of its assets in Lafarge India.

Presently, the players in the Eastern region, in descending order of their market share, are Dalmia (18%), Nuvoco (17%) Ultratech (15%); ACC+Ambuja (15%); Shree Cement (12%); Star Cement (5%); JSW Cement (3%); JK Lakshmi (3%) and Ramco (3%). The rest of the players have a mixed 9%. If ACC+Ambuja merges with Nuvoco, the combined market share will be 42%.

According to Jeffries, any single player surpassing 44% or two players crossing 31% each or three players surpassing 26% each, and so on will result in HHI surpassing 2,000.

Image Source

Also read: Adani to raise Rs 12k cr debt from SBI for Ganga Expressway

Adani Group may not be able to swing the buy-out of Nirma group’s Nuvoco if the Competition Commission of India (CCI) were to strictly go by the threshold for mergers and acquisitions (M&A) transactions clearing. The latest report from Jefferies on consolidation in the cement sector in India said that Adani may find it challenging to obtain the CCI approval for the Nuvoco buys based on the metric used by the competitor watchdog to pass or disallow M&A transactions. Adani Group may be looking for a new purchase after buying out Holcim’s stake in ACC and Ambuja Cement. The next target was supposed to be Nuvoco. CCI considers the Herfindahl Hirschman Index (HHI) when clearing acquisitions. The index is a measurement of market concentration, and it is applied to witness the extent to which a merger and acquisition (M&A) will improve concentration and weaken competition. According to Jefferies, any M&A resulting in HHI surpassing 2,000 may face hindrances from the CCI, and merging Ambuja-ACC with Nuvoco gets the index close to uncomfortable levels. For FY23, HHI for the Eastern region would move to 1945 from 1498 if we merge Ambuja and ACC with Nuvoco. It is a close number to Holcim Lafarge combination estimation where CCI felt it would be appropriate for Lafarge to divest, said the report. In 2014, when Holcim and Lafarge announced their global merger, the competition watchdog in India had asked the combine to divest some of the assets in the country. In 2016, CCI approved the divestment by LafargeHolcim (now Holcim Ltd) of its assets in Lafarge India. Presently, the players in the Eastern region, in descending order of their market share, are Dalmia (18%), Nuvoco (17%) Ultratech (15%); ACC+Ambuja (15%); Shree Cement (12%); Star Cement (5%); JSW Cement (3%); JK Lakshmi (3%) and Ramco (3%). The rest of the players have a mixed 9%. If ACC+Ambuja merges with Nuvoco, the combined market share will be 42%. According to Jeffries, any single player surpassing 44% or two players crossing 31% each or three players surpassing 26% each, and so on will result in HHI surpassing 2,000. Image Source Also read: Adani to raise Rs 12k cr debt from SBI for Ganga Expressway

Next Story
Infrastructure Energy

REC Transfers HVDC Project to Power Grid

REC Limited has successfully handed over the Special Purpose Vehicle (SPV) for a High-Voltage Direct Current (HVDC) transmission project to Power Grid Corporation of India Limited (PGCIL). This strategic move aligns with the nation's objectives to strengthen its power transmission network. Key Highlights: Project Overview: The HVDC project, under the inter-state transmission system (ISTS) initiative, is a critical component of India's push toward robust and efficient electricity transmission. It aims to handle bulk power transfer across long distances while ensuring minimal losses. Role of RE..

Next Story
Infrastructure Transport

NF Railway Collaborates with IIT Guwahati

The Northeast Frontier (NF) Railway has signed strategic Memorandums of Understanding (MoUs) with IIT Guwahati to foster technological advancements and improve railway operations in the region. This partnership focuses on innovative solutions to enhance safety, efficiency, and sustainability in rail infrastructure. Key Highlights: Purpose of MoUs: The collaboration aims to leverage IIT Guwahati's expertise in technology and research for implementing cutting-edge solutions across railway operations. Key areas of focus include: Automation and digitization in maintenance. Sustainability initiati..

Next Story
Infrastructure Transport

Danapur Division Modernization Plans Revealed

The Railway Board has unveiled ambitious plans for the expansion and modernization of the Danapur Division, a critical hub under the East Central Railway. The initiative focuses on infrastructure development, enhanced passenger amenities, and operational efficiency. Key Highlights: Scope of Modernization: The Railway Board's blueprint emphasizes: Upgrading existing infrastructure to accommodate more passenger and freight traffic. Improving station facilities, such as platforms, waiting areas, and connectivity. Introducing advanced signal systems for safer and smoother operations. Freig..

Hi There!

"Now get regular updates from CW Magazine on WhatsApp!

Join the CW WhatsApp channel for the latest news, industry events, expert insights, and project updates from the construction and infrastructure industry.

Click the link below to join"

+91 81086 03000