New appointment of MDs at ACC, Ambuja Cements to streamline business

The appointment of new managing directors at LafargeHolcim-controlled ACC and Ambuja Cements last week is expected to further streamline the reporting structure in the group, bringing in better alignment in operations.

ACC on Thursday said Neeraj Akhoury, managing director (MD) and chief executive officer (CEO) of the company tendered his resignation with effect from Thursday. In a separate announcement, Ambuja Cements said Akhoury is the company’s new MD and CEO, with Bimlendra Jha, CEO of Ambuja Cements, resigning from the same post.

At ACC, Sridhar Balakrishnan, former chief commercial officer (CCO), has been elevated as the CEO and MD while Akhoury continues as a director on ACC’s board.

Both companies in their statements to the exchanges said there was no other ‘material reason’ for the developments. Analysts, however, see the new appointments helping LafargeHolcim bring better coordination for its two cement firms in India.

An expected merger between the two Indian cement giants has kept the market guessing for more than a decade now. With no fresh plan for a merger in sight, experts see the appointments as helpful in streamlining their reporting structure.

“The appointments at ACC and Ambuja must be seen as another step to streamline reporting structure at the two companies. I expect more alignment between Ambuja and ACC,” Nitin Bhasin, head of research-institutional equities at Ambit Capital.

As MD of ACC, industry sources said, Akhoury reported directly to LafargeHolcim India head.

The new appointments will help streamline reporting between Ambuja Cements and ACC. An email query sent to the Ambuja Cements on Friday remained unanswered.

 

As part of restructuring in group holding in 2016, ACC was made a subsidiary of Ambuja Cements, which, at present, holds 50.05 per cent stake in ACC. The LafargeHolcim group, on the other hand, holds 63.39 per cent in Ambuja Cements.

ACC and Ambuja Cements explored the merger option in 2017, however, the decision was later called off. In March 2018, the two companies decided to enter into a master supply agreement, which intends to bring more operational synergy between the two firms. “The new appointments are a desperate measure to get the master supply agreement going, which, so far, has not shown any impact,” said an analyst.

Akhoury assumed office as MD and CEO in February 2017; however, his association with the LafargeHolcim group has been longer. Prior to the ACC appointment, Akhoury was CEO of Lafarge Surma Cement and country representative of LafargeHolcim Bangladesh. He was brought in at ACC, shortly after the global merger of erstwhile Lafarge and Holcim.

Experts said Akhoury has been able to bring erstwhile Lafarge group’s aggression to ACC and with the appointment, a similar strategy is expected at Ambuja Cements. For instance, in 2018, ACC announced its long-awaited expansion plans worth Rs 3,000 crore for a greenfield cement plant at Katni, Madhya Pradesh, and expansion of the company’s other grinding capacities.