Ambuja Cements to buy 47% stake in Orient Cement at Rs 8,100 crore valuation

Adani Group's Ambuja Cements Ltd on Tuesday said it would purchase 46.8 per cent shares of Orient Cement Ltd at an equity value of Rs 8,100 crore or Rs 395.40 per share. "Transaction to be fully funded through internal accruals. It includes 8.5 MTPA Cement Operational Capacity. It also has 8.1 MTPA Ready to execute projects. High quality limestone mine at Chittorgarh (Rajasthan) can support additional 6.0 MTPA Cement Capacity in North India," the Gautam Adani-led firm stated in an exchange filing.

The acquisition will take Adani Cement operational capacity to 97.4 MTPA, accelerates to achieve 100 MTPA+ capacity by Marçh 2025, it added.

Sharing the rationale behind this investment, Ambuja said it helps the company to increase its presence by 8.5 MTPA in core market of South & West India. It pan-India market share is expected to improve by 2 per cent.

In terms of profitability, it is expected to improve capacity utilization which will ramp up to 85 per cent by third year. Ambuja and ACC brand to further help in trade sales, improving realizations and sale of premium cement.

"This timed acquisition marks another significant step forward in Ambuja Cements' accelerated growth journey, increasing cement capacity by ~30 MTPA within two years of Ambuja’s acquisition," said Karan Adani, Director of Ambuja Cements.

"Ambuja is poised to reach 100 MTPA cement capacity in FY25. Orient Cement's assets are highly efficient, equipped with railway sidings and well supported by captive power plants, renewable energy, WHRS and AFR facilities. Its strategic locations, high-quality limestone reserves and requisite statutory approvals present an opportunity to increase cement capacity in the near term to 16.6 MTPA," he added.

Ambuja mentioned that Orient Cement is almost debt free and this acquisition would further strengthen its balance sheet.

CK Birla, Chairman of Orient Cement and the CK Birla Group, said, "The CK Birla Group is continuously reallocating capital to sharpen its focus on consumer centric, technology driven and service based businesses. I take pride in Orient Cement's impressive track record of building premium brands and maintaining a leading market share in the geographies it operates in. We are confident that the Adani Group, with its strong focus on cement and infrastructure, is the ideal new owner to drive continued growth at Orient Cement for our people and stakeholders."

The company also stated that the acquisition would also improve its overall ROCE (Return on capital employed).