Adani-led Ambuja Cements buys 47% stake in Orient Cement for ₹8,100 cr

Adani group-led Ambuja Cements will acquire a 46.8% stake in Orient Cement Ltd (OCL) for an equity value of ₹8,100 crore or ₹395.40/share, a transaction that has triggered an open offer of 26% to acquire shares from public shareholders. The deal will be fully funded via internal accruals.

The current deal comes following Ambuja Cements' acquisition of Penna Cement Industries for ₹10,422 crore in June this year.

The acquisition will boost Ambuja's annual cement capacity by 16.6 million tonnes. "It (Orient) 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," Ambuja says in an exchange filing.

With this deal, Ambuja is aiming to take parent Adani Cement's operational capacity to 97.4 million tonnes per annum (MTPA) by March 2025, which is near its target of 100 MTPA. Explaining the rationale behind the investment, Ambuja says Orient will help it increase its presence by 8.5 MTPA in core market of South & West India and pan India by 2%. Ambuja says it plans to optimise OCL’s overall capacity utilisation to enhance its cost and competitiveness and improve its operating performance.

“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,” says Karan Adani, director, Ambuja Cements.

Adani group's Adani Cement had announced the merger of its cement businesses in June this year. Under this, Adani Cementation was merged with Ambuja Cement to become its a wholly owned subsidiary.

Karan Adani says Ambuja is poised to reach 100 MTPA cement capacity in FY25. "OCL’s assets are highly efficient, equipped with railway sidings and well supported by captive power plants, renewable energy, WHRS and AFR facilities. OCL’s 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.”

CK Birla, Chairman, Orient Cement and the CK Birla Group, says the Adani Group, with its focus on cement and infrastructure, is the ideal new owner to drive continued growth at Orient Cement for its stakeholders.

Incorporated on July 22, 2011, Orient is primarily engaged in the business of manufacturing and sale of cement. It has operations in India and its turnover for last three years is ₹3,185.09 crore for FY24; ₹2,937.55 crore for FY23; and ₹2,725.42 crore for FY22.

It has 5.6 MTPA clinker capacity and 8.5 MTPA cement capacity along with statutory clearance to increase the clinker capacity by another 6.0 MTPA and cement capacity by another 8.1 MTPA.

In addition, Orient also has a limestone mining lease in Chittorgarh for setting up an integrated unit (IU) with clinker of 4 MTPA and a split grinding unit (GU) of 6 MTPA in North India.

It also has secured a concession from M.P.Power Generating Company Ltd, Madhya Pradesh for setting up a grinding unit at Satpura Thermal Power Plant.