Mumbai, July 9: ACC will soon consider if it should merge with Gujarat Ambuja Cements Limited (GACL), a company that already owns close to 15 per cent of it. If both sides play ball, it will spawn the country’s largest cement maker with a capacity of 31 million tonnes.
An indication to that effect came at the annual general meeting of ACC, where chairman Tarun Das told shareholders the proposition would be taken to the board. This caught Gujarat Ambuja officials by surprise as they denied any such proposal “at this moment”.
“It doesn’t make sense to merge at this juncture. Both companies are undergoing financial restructuring and why should a stronger firm (Gujarat Ambuja) merge with a weaker one' It will do both companies no good at this juncture,” a GACL official said.
For his part, Das said the ACC board would discuss the feasibility of the plan and report to shareholders about it. Actually, the hint came when he was responding to a persistent shareholder who wanted to know if the company would go ahead and fold into Gujarat Ambuja — which has its nominees on the ACC board.
Signals of the merger come months after Kumar Mangalam Birla’s Grasim sewed up an intricate deal to snap up Larsen & Toubro’s cement division. The transaction was recently sealed after L&T investors responded strongly to the Birlas’ open offer for Ultra-Tech Cemco — the new company that holds the cement business.
Das said Grasim’s takeover of L&T’s cement wing will not affect ACC, which has already lined up a Rs 500-crore capital expansion this year. The ramp-up includes the modernisation of its Chaibasa plant, where a 1.3 mtpa clinkering unit will be set up along with a 15 MW captive power station at a cost of Rs 285 crore.
ACC’s consolidated capacity would increase to about 19 million tonnes once the update, which also includes three new ready-mixed concrete units, is completed.
Gujarat Ambuja, a late starter that set up shop in 1986, has grown ten fold in the last decade. It is the third-largest cement company that has sales of Rs 2,500 crore and the ability to produce 12.5 million tonnes every year.