Gautam Adani now chairman of Ambuja Cements; son Karan is ACC boss

The Adani group to infuse Rs 20,000 crore more in Ambuja Cements

Within hours of closing the $6.4-billion transaction to buy Swiss major Holcim’s stake in Ambuja Cements by the Adani group, the boards of Ambuja Cements and its subsidiary, ACC, were reconstituted on Friday. Gautam Adani, the patriarch of the Adani group, took over as chairman of Ambuja Cements’ board. while his elder son Karan was appointed chairman and non-executive director at ACC. Karan will also be a non-executive director at Ambuja Cements; Holcim's representatives have quit the boards.

The Ambuja Cements’ board also approved a preferential allotment of convertible warrants to an Adani group promoter entity, to raise an additional Rs 20,000 crore. This fund will be used to create additional capacity with the aim to become India’s biggest cement player by 2030.

“What makes cement an exciting business is headroom for growth in India which exceeds that of every other country well beyond 2050. Cement is a game of economics dependent on energy costs, logistics and distribution costs, and the ability to leverage a digital platform to transform production, as well as gain significant supply chain efficiencies. Each one of these capabilities is a core business for us and therefore, provides our cement business a set of unmatched adjacencies,” said Gautam Adani, chairman of the Adani group.

“It is these adjacencies that eventually drive competitive economics. In addition, our position as one of the largest renewable energy companies in the world will help us manufacture premium quality green cement well in line with the principles of a circular economy. All of these dimensions put us on track to become the largest and most efficient manufacturer of cement by no later than 2030,” Adani said.

UltraTech, an Aditya Birla group company, is currently India’s largest cement company with a capacity of 120 mtpa (million tonnes per annum). Ambuja Cements and ACC, on the other hand, currently have a combined installed production capacity of 67.5 mtpa. The two companies are among the strongest brands in India with 14 integrated units, 16 grinding units, and 79 ready-mix concrete plants.

The warrants will be issued at the rate of Rs 418.87 each, and constitute 19.39 per cent of the share capital of the company on a post-issue basis. The additional fund shall equip Ambuja to capture growth in the market, the Adani group said in a statement. 

Karan, 35, is also the CEO of Adani Ports and Special Economic Zone. ACC also appointed Vinod Bahety, earlier with Adani group, as the CFO. The MD and CEO of ACC Sridhar Balakrishnan was re-designated as whole time director and CEO.

Holcim Chief Executive Officer Jan Jenisch and Head of Asia Pacific and member of the Group Executive Committee of Holcim Martin Kriegner stepped down from board of both companies.

Neeraj Akhoury resigned as non-executive non-independent director of ACC, following his resignation as managing director of Ambuja Cements. NS Sekhsaria, non-executive chairman of both Ambuja and ACC, also resigned but he was appointed as chairman emeritus of Ambuja.

Both Ambuja Cements and ACC will benefit from synergies with the integrated Adani infrastructure platform, especially in the areas of raw material, renewable power and logistics, where Adani portfolio companies have vast experience and deep expertise, it said.

Ambuja and ACC will also benefit from the Adani group’s focus on ESG, circular economy and capital management philosophy, it said. The businesses will continue to be deeply aligned to UN Sustainable Development Goals. 

The Adani group said that in line with its governance philosophy, the board committees of both Ambuja Cements and ACC have been reconstituted. The audit committee and the nomination & remuneration committee now comprise 100 per cent independent directors.

Further, two new committees have been constituted – the Corporate Responsibility Committee and the Public Consumer Committee – both comprising 100 per cent independent directors to provide assurance to the board on ESG commitments and also maximise consumer satisfaction. Also, a commodity price committee has been constituted with 50 per cent independent directors, to strengthen risk management.

Earlier Swiss major Holcim said the transaction strengthens Holcim’s balance sheet and enables the company to continue its acquisition strategy, building on recent investments of over CHF 5 billion in solutions & products. 

“I would like to thank our 10,700 Indian colleagues who have played an essential role in the development of our business over the years with their relentless dedication and expertise. I am convinced that the Adani group is the right home for them as well as for our customers to continue to thrive in the future,” said Jan Jenisch, Holcim’s CEO.

The transaction was financed by facilities aggregating to $ 4.5 billion availed from 14 international banks. Barclays Bank, Deutsche Bank AG, and Standard Chartered Bank acted as original mandated lead arrangers and bookrunners to the transaction.

Barclays Bank, DBS Bank, Deutsche Bank, MUFG Bank, and Standard Chartered Bank acted as mandated lead arrangers and bookrunners to the transaction. 

In addition, BNP Paribas, Citibank, Emirates NBD Bank, First Abu Dhabi Bank, ING Bank, Intesa Sanpaolo, Mizuho Bank, Sumitomo Mitsui Banking Corporation, and Qatar National Bank acted as mandated lead arrangers for the transaction.

Adani’s Cement Play

1. Ambuja, ACC is largest acquisition in India's Infrastructure and Materials spaceee
2. Post the transaction, Adani will hold 63.15% in Ambuja Cements and 56.69% in ACC 
3. Adani is now India’s second largest cement maker with capacity 67.5 MTPA
4. Enhanced corporate governance with 100% independent directors on audit committee, NRC
5. Two new Board committees  of independent directors, will drive ESG assurance and consumer-first approach