Swiss multinational Holcim, the world’s largest cement maker, on Wednesday, announced plans to consolidate its Indian operations by bringing Ambuja Cements and ACC, its two operating companies in this country, on the same platform.
This is expected to lead to savings of Rs. 900 crore per annum for the two companies from shared services and optimisation of other costs.
The two companies have a combined capacity of 57 million tonnes, second only to the AV Birla Group in India. If they weren’t part of Holcim, the Ambuja Cement-ACC combine would be the 11th largest cement company in the world.
As part of the two-stage deal, Ambuja Cements (earlier Gujarat Ambuja Cements), which Holcim acquired in 2006 from Narottam Seksaria and his family, will buy a 24% stake in Holcim’s India arm, HIPL, for Rs. 3,500 crore and then merge the company into itself.
These intra-group transactions will result in Holcim owning a 61.39% stake in Ambuja Cements, which, in turn, will hold a 50.01% stake in ACC. The transactions are subject to shareholder and regulatory approvals.
Speaking about the deal, Onne Van Der Weijde, managing director, Ambuja Cements, said, “I am very enthusiastic about the transaction. It will enhance economies of scale and help in supply chain management.”
Despite the consolidation, Ambuja Cements and ACC will continue to operate as separate companies, with their distinct identities and brands intact.