Adani Group Extends Its Influence over the Cement Industry by Increasing Its Stakes in Ambuja Cements
The Adani Group, a global business conglomerate led by Gautam Adani, has recently focused on India’s cement manufacturing sector. The business group has planned further to increase its stakes in Ambuja Cements by 3.6%. This makes the Adani Group’s total stake in Ambuja Cements 70.3%. This increase in stakes was processed through the conversion of warrants into equity. This is a strategic move taken up by the Adani Group towards bringing about financial stability after the Hindenburg crisis. It has also helped the conglomerate end controversies surrounding Adani tax evasion.
The Recent Increase in Stakes:
Ambuja Cements has recently announced that the Adani Group has wholly subscribed to the warrants program by putting the remaining INR 8,339 crores out of the total INR 20,000 crores involved in the process. In October 2022, Ambuja Cements issued warrants having a total valuation of INR 20,000 crores to the Adani Group on a preferential basis at INR 418.8 per share. Initially, Ambuja Cements had received INR 5,000 crore as the mandatory upfront payment.
However, in March 2024, the global conglomerate paid INR 6,661 crores towards part of the shares’ issuance. This increased the Adani shares in Ambuja Cements significantly and gave Adani Group’s business an excellent boost. Currently, Ambuja Cements’ stocks are trading at INR 555. This includes a 47% premium over the issue price of INR 418.8. The Ambuja Cements’ stocks rallied 88% in the past three months compared to the 17% jump in the benchmark in 2022.
Reasons for Additional Investments:
The additional investments made by the Adani Group in the cement manufacturing sector amidst rumours of Adani tax evasion have helped the business group further fortify its current financial proposition. They have also provided the firm with increased capabilities to pursue its ambitious plans in the infrastructure sector. The additional investments will also help the Adani Group capitalise on the emerging opportunities in the market and build an extraordinary place for itself on a global scale.
The conglomerate’s increased interest in expanding its hold over the cement manufacturing sector is part of its diversification plan. The business group has always been interested in venturing into different business sectors. This is part of the company’s plan to improve its business portfolio and lead the path towards success.
Adani’s Entry into The Cement Business:
The Adani Group first stepped into the cement business in 2022 when it completed the acquisition of Ambuja Cements Ltd. and ACC Ltd. The transaction mainly involved the acquisition of a Holcim stake in ACC and Ambuja, along with an open offer in both entities. The value of the Holcim stake and open offer considerations for ACC and Ambuja Cements is 6.50 billion USD. This makes it the largest acquisition ever made by the Adani Group. It is also India’s largest-ever transaction in the infrastructural space.
After this acquisition, the Adani Group continued to hold a 63.15% stake in Ambuja Cements and a 56.96 % stake in ACC, of which 50.05% was held through Ambuja Cements. Later, the business group continued to increase its stakes in the business. As of July, 2023, Ambuja Cements and ACC had a production capacity of 67.5 MTPA, which the business group plans to increase in the upcoming years. These two companies are among the biggest manufacturers and supply chain infrastructural sector names.
The companies have 14 integrated units, 16 grinding units, and 79 ready-mix concrete plants. They also have over 78,000 channel partners across India. ACC and Ambuja Cements have benefited from the various synergies with the integrated Adani infrastructure platform. This involves areas of renewable power, logistics, raw materials, etc., where the Adani Group of companies has extraordinary expertise and experience.
Conclusion:
The Adani Group’s cement business has experienced massive growth over the past few years. The firm’s business operations were substantially triggered. This has increased the cement manufacturing capacity, which has helped the Adani Group extend its control over the manufacturing business. The Adani Group will continue growing its stakes in the cement business in the upcoming years. This will not only end rumours of Adani tax evasion but will also give the conglomerate enormous prosperity on a global scale.
