On Tuesday, Ambuja Cements, which Adani controls, declared that it has finalized a deal to buy Orient Cement Ltd (OCL) for an equity worth Rs 8,100 crore. According to the company, Ambuja will purchase 46.8% of OCL’s shares from its present proprietors and some public shareholders. Internal accruals will entirely finance the transaction.
For Rs 395.40 a share, Ambuja Cements would buy a 46.8% stake in OCL from its current promoters and a few public shareholders. The stake is being purchased by the corporation at a premium of 12% over the most recent closing price. It will moreover make an open offer to Orient Cement’s stockholders for an extra 26% at Rs 395.40.
“This well-timed acquisition represents another important step forward in Ambuja Cements’ accelerated growth journey, increasing cement capacity by ~30 MTPA within two years of Ambuja’s acquisition,” stated Karan Adani, Director of Ambuja Cements.
Through the acquisition, Ambuja Cements would be able to expand its position in the South and West India core market by 8.5 MTPA and reach 100 MTPA of cement capacity in FY25. Additionally, it will enable Ambuja Cements to increase its market share in India by 2%. Additionally, OCL has 8.1 MTPA of additional capacity that is at the Ready to Execute stage, and construction can be started immediately.
OCL has a 5.6 MTPA clinker and 8.5 MTPA cement capacity. It also has statutory approval to expand its cement and clinker capacities by an additional 8.1 MTPA and 6.0 MTPA, respectively. Furthermore, to establish an Integrated Unit (IU) with a clinker of 4 MTPA and a split Grinding Unit (GU) of 6 MTPA in North India, OCL also holds a limestone mining lease in Chittorgarh. Additionally, OCL has obtained a concession from MPPGCL, Madhya Pradesh, to establish a grinding unit on the Satpura Thermal Power Plant’s grounds. The Adani Group’s current cement footprint is enhanced by both of these.
Ambuja intends to use the synergies present in the current cement industry to optimize OCL’s entire capacity utilization to save costs, increase competitiveness, and improve operating performance. Additionally, the transaction will improve Orient Cement’s balance sheet.
