Mumbai: Swiss cement giant Holcim is looking at buying the remaining 22% stake in Ambuja Cement India Ltd (ACIL) that it does not already own from Bombay Stock Exchange listed Gujarat Ambuja Cements in a deal that could be worth Rs1,053 crore.
ACIL is the company which holds stake in Gujarat Ambuja Cements Ltd (GACL) and ACC, two of India’s largest cement companies. GACL recently sold a 11% stake in ACIL to Holcim for Rs526.5 crore resulting in a cash profit of Rs240 crore.
“We will look at buying the remaining stake depending on the Ambuja’s cash requirement,” said a senior Holcim official at its Zurich headquarters in a telephonic interview. GACL will use cash from the sale of investments, proceeds from sale of a 8,763 sq.m property in Kalina suburban Mumbai (estimated to be worth over Rs200 crore), and debt amongst others to fund its investment in the expansion projects. The company had Rs378.1 crore of cash on its balance sheet as of 31 December 2006.
The company, which has primarily been into West India, now plans to set up six new plants all over the country and also invest in setting up captive power plants to ensure against erratic power supply that plagues India. The Rs3,350 crore expansion project will raise its capacity by 27%, to 22 million tonnes per annum by 2009.
“The company has a strong balance sheet. Funding their expansion plans is not a problem. They will sell the remaining stake in ACIL in tranches which should bring some more profits,” says a Mumbai-based analyst tracking cement sector for a leading brokerage.
ACIL currently holds 9.93% stake in GACL and a 35.15% stake in ACC.