Mint Explainer | Why Adani is folding its cement assets into Ambuja now
The merger follows a rapid acquisition spree since 2022 and aims to streamline operations, cut costs and create a single pan-India cement platform under Ambuja Cements.
MUMBAI: After spending nearly $10 billion over three years to build India’s second-largest cement business, the Adani Group is moving to simplify what has become a sprawling corporate structure.
The board of Ambuja Cements Ltd, part of billionaire Gautam Adani’s conglomerate, late on Monday approved a plan to merge ACC Ltd and Orient Cement Ltd into Ambuja. Ambuja currently holds 50.05% in ACC and 72.66% in Orient. The cement maker estimates that it will take about 12 months to secure approvals from shareholders, creditors and regulators and complete the transactions.
Shares of Ambuja Cements rose 2% on Tuesday following news of the merger, while the benchmark Sensex was largely flat.
The announcement comes a year after Ambuja’s board approved the amalgamation of listed Sanghi Industries and unlisted Penna Cement into itself last December, signalling a broader push by the group to consolidate assets acquired in quick succession since 2022.
Mint breaks down what this merger means for shareholders and how it reshapes Adani’s cement business.
What does the merger mean for shareholders?
For every 100 shares of ACC, investors will receive 328 Ambuja shares. Orient Cement shareholders, meanwhile, will get 33 Ambuja shares for every 100 shares they own.
The swap ratio for ACC is broadly in line with its current market price, while the swap ratio for Orient implies an 8% premium over its latest trading price, according to analysts at Antique Stock Broking.
Following the allotment of shares, the promoter and promoter group’s holding will fall to 60.94% from 67.65% after the merger of all four companies, including Sanghi Industries and Penna Cement.
What does it mean for Adani's cement business?
After the mergers, the Ambuja and ACC brands will continue to operate as usual. The move will create a single, pan-India cement player under the Adani Group.
“By bringing Ambuja Cements, ACC, and Orient Cement under a single corporate structure, we are strengthening our ability to drive operational excellence, accelerate growth, and deliver sustainable long-term value," Karan Adani, non-executive director, Ambuja Cements, Adani Group, was quoted as saying in a company statement on the merger. “This merger builds on our already proven track record to further position the business to drive efficiency and productivity."
All assets, including intangible assets such as brands and trademarks, and all liabilities, including reserves, of ACC and Orient Cement will be transferred to Ambuja’s standalone financial statements, as per the statement.
The amalgamation eliminates “structural duplication, reduces administrative costs, and enables faster, more agile decision-making. In addition, there will be no specific MSA required with ACC, Orient, Penna & Sanghi as these subsidiaries will become an integral part of Ambuja Cements," it added.
A master supply agreement (MSA) is required to share resources, such as cement, clinker, raw materials, and toll grinding for cost savings, leveraging their combined scale.
The merger will also simplify procurement and sales networks across Adani’s cement business and reduce branding and sales promotion expenses, the company said in the statement. This is expected to improve margins by at least ₹100 per tonne, according to the company.
How do analysts view this?
Analysts at Motilal Oswal said in a note dated 23 December that the announcement is a positive development. They said the transaction represents a step towards simplifying the group’s cement structure and aligns with management’s stated focus on consolidation, scale and capital efficiency.
They added that the merger improves balance-sheet flexibility and strengthens Ambuja’s ability to drive synergies across its cement portfolio.
The restructuring is expected to lead to meaningful cost savings and better margins for Ambuja over FY26-28, analysts at Antique Stock Broking said in a note dated 23 December.
How much has Adani spent to become the second-largest cement company?
Gautam Adani agreed to buy Swiss cement maker Holcim’s India businesses—ACC and Ambuja Cements—for $6.5 billion in 2022, marking the group’s entry into the cement sector.
Cumulatively, the group has spent a little under $10 billion acquiring five companies, including Sanghi Cement, Penna Cement and Orient Cement, excluding greenfield expansions. Taken together, these companies have an annual cement production capacity of 107 million tonnes per annum, second only to Aditya Birla Group’s UltraTech Cement.
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