Holcim weighs sale of cement business in India: report
15 Apr 2022
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Holcim Ltd, the world’s biggest cement manufacturer, is considering to exit its India business through a sale of assets, including Ambuja Cement and ACC Ltd, according to a report. The report, quoting unidentified sources, said the Swiss giant’s focus on core markets is the main reason behind the move to exit India, about 17 years after the Swiss giant entered the country.
Holcim is currently “gauging interest in its controlling stake in Ambuja", reports cited people familiar with the matter as saying.
Ambuja Cement has a market value of around $9.6 billion, and Holcim holds a 63.1 per cent stake in Ambuja through Holderind Investments Limited while Holderind Investment directly holds another 4.48 per cent stake in ACC.
A report in the Economic Times said Holcim is in early-stage negotiations with JSW and Adani Group, among others, “to explore their interest levels".
The report also quoted sources as saying that felers have also been sent to other Indian cement operators, including Shree Cement. “Global cement companies who have circled around India for long are also expected to be tapped, since taking over both Ambuja and ACC will catapult any player to the second position with a combined pan India capacity of 66 million tonnes per annum in the highly competitive, fragmented and price sensitive market," said the organisation in the report.
In 2015, Holcim had merged with its French rival Lafarge to create European building materials giant LafargeHolcim. Post merger, Holcim was forced to undergo multiple restructurings in order to abide by anti-trust regulations across the world. This was done by divesting assets in several areas, including Europe and Asia.
Holcim Group has also recently been on a spree to sell off its non-core assets so as to reduce debt and diversify through acquisitions. In September last year, Holcim sold off its Brazilian unit for $1 billion and is also in talks to divest its business in Zimbabwe, Bloomberg reported.
The news of Holcim selling Ambuja Cements and ACC comes at a time when Ambuja said it expects demand in the cement industry to grow over 7 per cent in 2022, adding it is “well-braced" to meet the requirements. The growth would be helped by factors such as infrastructure growth, demand for housing, increase in rural incomes and industrial growth, the company had earlier said.
Holcim entered India in 2005 and gradually built synergies in ACC and Ambuja Cements, although without a full-fledged merger.
In May 2017, ACC and Ambuja Cements announced plans for a merger. In the following year they informed the bourses that they are not proceeding with the plan.
In 2018, ACC and Ambuja Cements entered into master supply agreements for the supply of cement, clinker and raw materials such as fuels, fly ash, slag and gypsum and also spare parts.
Aditya Birla group’s UltraTech Cement is the country’s largest cement maker with a capacity of 117 million tonnes. The combined capacity of ACC and Ambuja Cements is over 65 million tonnes.
As of Wednesday, the market capitalisation of Ambuja and ACC when combined stood at Rs 1.14 lakh crore ($15 billion) with Ambuja alone being at Rs73,349 crore ($9.7 billion). The company’s shares have increased by 16 per cent since 6April, on anticipation of a possible merger.
