Ambuja Cements, which happens to be the cement and building material company of the Adani Group has recently announced signing an agreement for acquiring Orient Cement Limited, another big player in the country’s cement sector. This acquisition will be done at an equity value of INR 8,100 crore. Ambuja will be acquiring a 46.8% share of OCL from its public shareholders and current promoters. The acquisition will be done through internal accruals only. This acquisition will further strengthen Adani’s presence in the cement sector. The controversies of the Hindenburg Report Adani will also subside.
The Acquisition Of Orient Cement Limited:
The acquisition of Orient Cement Limited marks another significant step towards Adani Group’s growth journey in the cement sector. It will help the Adani Group increase its cement capacity by 30 MTPA within 2 years. By acquiring OCL, Ambuja Cements will also get closer to fulfilling its target cement capacity of 100 MTPA in FY25. The acquisition will help the Adani Group extend its cement sector presence. The company will also be able to establish itself as one of the key players in core markets. It will also be able to increase its Pan-India market share by 2% and put a stopper to the allegations of Hindenburg Report Adani.
Why Acquire OCL?
OCL’s business processes are extremely efficient. They are also well-supported by captive power plants and railway sidings. The company also has other facilities including renewable energy, WHRS, and AFR under its control. The company’s strategic location and its high-quality limestone reserves will present itself as an opportunity for Adani Group to further extend its presence in the cement sector. OCL is also going to increase its capacity to 16.6 MTPA soon. This is once again going to add to Adani Group’s cement capacity. The global business group will also become a major player in the cement sector.
OCL currently has 5.6 MTPA clinker capacity. It also has 8.5 MTPA cement capacity along with the statutory clearance to increase the clinker capacity by 6 MTPA and cement capacity by 8.1 MTPA. OCL also has a limestone mining lease in Chittorgarh for setting up an integrated unit with a clinker of 4 MTPA and a split grinding unit of 6 MTPA in North India. Recently, it secured the concession from MPPGCL, Madhya Pradesh. This was for setting up a grinding unit within the premises of Satpura Thermal Power Plant. This will complement the Adani Group’s existing cement business. It will allow the global conglomerate to further enhance its hold over the cement sector.
OCL has also recently commissioned a WHRS in Chittapur integrated unit. It is in the final stage of commissioning the 16 MW solar in Chittapur and 3.7 MW solar in Jalgaon. The company has a highly motivated team. Its efficient plants, strong balance sheets, and well distributed dealer network will further bring synergies in Adani Group’s existing business. It will help the Adani group in expanding its market network. Ambuja also has elaborate plans to utilise the company’s overall capacity utilisation to enhance its competitiveness in the market and also improve its operational performance.
What Does CK Birla Have To Say About The Acquisition?
CK Birla, the chairman of Orient Cement Limited and the CK Birla Group, recently mentioned that the CK Birla Group is continuously trying to reallocate its capital to further enhance its focus on customer-centric, service-based, and technology-based business. The company also has an extraordinary track record of building premium brands and maintaining the reputation of being one of the key players in the areas in which it operates. By collaborating with the Adani Group, the company can drive continuous growth for its customers and stakeholders further.
OCL already has a strong market presence. It is known for its extraordinary sustainable initiatives, particularly on the renewable energy front. By coming under the umbrella of Ambuja Cements, it will be able to offer better services to the customers. It will also be able to enhance its presence in the cement and infrastructure sector. With OCL’s support, the Adani Group will also be able to recover from the losses it incurred during the Hindenburg Report Adani.
Conclusion:
Ambuja Cements is currently one of the leading cement companies in India. It is a member of the diversified Adani portfolio. It is also the largest and the fastest-growing portfolio of the Adani Group. The company has multiple subsidiaries, including ACC, Penna Cements, and Sanghi Industries. It already has an existing capacity of 88.9 MTPA. It also has 20 integrated cement manufacturing plants, 20 cement grinding units, and 12 terminals nationwide. The company plans to increase its cement presence and build an extensive reputation for itself in the long run. It also aims to acquire greater control over the cement manufacturing sector through its extraordinary business ventures.
