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Ambuja scaffold for Holcim highrise
- Swiss giant cements plan for ACC

Mumbai, Jan. 20: Swiss giant Holcim has opened a three-way route to enter India on a Gujarat Ambuja vehicle.

At the centre of the foray is Ambuja Cement India Ltd (ACIL), an unlisted firm 60 per cent owned by Gujarat Ambuja Cement (GACL) and 40 per cent by American Insurance Group (AIG) and GIC, a Singapore government entity. Ambuja Cements India holds 13.8 per cent in ACC and 94 per cent in Ambuja Cement Eastern Ltd, whose annual capacity is 2 million tonnes.

In the first stage, Holcim will buy out AIG and the Singapore investment firm in Ambuja Cement India (ACIL) for $200 million. In the second, it will make a $600-million infusion that will take the Swiss giant's stake to 67 per cent, leaving Gujarat Ambuja with 33 per cent. In the third, the Holcim-controlled Ambuja Cement India will make open offers to raise its stake to 50.1 per cent in ACC and 100 per cent in Ambuja Cement Eastern.

Investors offering ACC shares will be paid Rs 370 apiece, a small premium on the stock's closing price of Rs 341.75 on the Bombay Stock Exchange today. Those who part with Ambuja Cement Eastern shares will get Rs 70 apiece.

The strategic partnership, Gujarat Ambuja said, will enable both firms 'to realise value-creating projects in India and to participate in the industry's dynamic growth'.

Ambuja Cements and Holcim have agreed to make Ambuja Cement India the platform for their strategic alliance. The plan to acquire controlling stake in ACC is part of it.

The open offer price does not appear to have gone down too well with investors of ACC, whose shares fell 6.45 per cent to Rs 341.75 today. The Gujarat Ambuja stock slid 4.90 per cent, from Rs 445.35 to Rs 423.50. Analysts say Rs 370 is the price at which Gujarat Ambuja acquired its ACC stake in 1999, a time when there was more cement around than companies could sell.

Now, when demand is running ahead of supply, the company expects to buy 36 per cent of ACC from investors at a price it had forked out some six years back. This could make the offer less successful than hoped.

The media-shy Narottam Sekhsaria of Gujarat Ambuja was cooped up in his Nariman Point office but Holcim said it had been looking at several options to get a foothold in India's booming cement market for some time.

For the world's second-largest cement maker, the $800 million it will shovel into India pales alongside the $4 billion it has offered to snap up UK's Aggregate Industries. In India, it nearly pulls off a coup with 20 million tonnes of cement-making capacity going under its belt. This is not the first time that Holcim has entered India. Its earlier tieup with Kalyanpur Cement fell through.

The Swiss major will use India as a platform for its infotech and research support systems, while tapping Indian talent for its global operations.

Report card

Gujarat Ambuja recorded a 50.4 per cent jump in net profit at Rs 89.55 crore for the quarter ended December 31 compared with Rs 59.54 crore in the same quarter of 2003. ACC's profit firmed up by 137.8 per cent to Rs 53.08 crore against Rs 22.32 crore.

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