Adani Group may merge all cement assets under single entity: Jefferies

Executives from Adani Cement told Jefferies they are exploring plans for consolidating all cement companies in the medium term

Adani Group’s Ambuja Cements plans to consolidate all cement companies under a single entity in the medium term, according to brokerage firm Jefferies.

The brokerage firm published its note last week, after Adani Group companies’ investors’ meeting in Ahmedabad on June 19.

“The company plans to consolidate all cement companies under one head in the medium term. The merger cost is not a deterrent, but the company is working on identifying the best structure in the interest of minority and other stakeholders,” the note added.

ACC and Ambuja Cement were acquired by the Adani Group in September 2022 for $6.4 billion. The acquisition made the conglomerate the second-largest cement player in the country after UltraTech.

ACC Ltd and Sanghi Industries are two cement subsidiaries, in which Ambuja Cements holds a stake, along with other minority shareholders. Both entities are listed on the exchanges.

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An email query sent to Adani Cement on Saturday requesting a comment on the Jefferies report and a clarification if the consolidation will include ACC, remained unanswered at the time of going to the press.

Ambuja Cements holds a 60.44 per cent stake in Sanghi Industries, an asset it acquired from its former promoters in the last financial year.

Ambuja also holds a 50.05 per cent stake in ACC, which it has held since an earlier restructuring by former promoters – Holcim Group in 2013. 

The shareholding figures are as of March this year.

In an interview with Business Standard in August last year, Ajay Kapur, chief executive officer for the company said that there were “no plans to merge ACC and Ambuja as of now.”

This is not the first time a merger of cement assets for Ambuja Cements has been considered. Legacy attempts to merge ACC and Ambuja Cements have fallen short for various reasons.

Erstwhile promoters Holcim instead chose to enter the two companies into a Master Supply Agreement to reap synergy benefits, which Kapur in the August interview noted had been already optimised.

Ambuja Cements, which included listed subsidiaries, Sanghi and ACC, had a capacity of 77 million tonnes per annum (mtpa) in March this year.

This figure is expected to rise to 89 mtpa with the acquisitions of the 2 mtpa capacity from My Home Industries and 10 mtpa operational capacity from Penna Cement.

The company plans to raise its consolidated capacity to 140 mtpa by 2028.