Billionaire Gautam Adani’s son Karan will run the cement firm, that his group has acquired to become India’s second-largest cement player. He wants to expand his burgeoning empire more, stretching from ports and energy to airports and telecoms.
In a media statement, the Adani Group announced the completion of the acquisition of Ambuja Cements and ACC for a total of US$6.5 billion, which includes the buyout of Swiss Cement Major Holcim in the two companies.
Events After Adani Took Over the Cement Company
Soon after the Adani takeover, the two cement manufacturers announced the resignation of their boards, including CEOs and CFOs. The conglomerate has appointed its founder chairman Gautam Adani, the head of Ambuja Cements. His son Karan, who heads the group’s ports business, has been appointed as the cement manufacturer firm’s director and chairman of ACC Ltd.
The Adani Group has been quick to appoint independent directors to the boards of the two companies. These included ex-State Bank of India chairman Rajnish Kumar in the panel of Ambuja Cement and ex-Shell India chief Nitin Shukla in the panel of ACC. It appointed Ajay Kumar, the new CEO of Ambuja Cement replacing Neeraj Akhoury and Sridhar Balakrishnan for ACC.
Karan, 35, is an economics graduate from Purdue University in the US and oversees Adani Ports and SEZ Ltd, which has grown from two ports to a chain of 10 ports.
Gautam Adani (60), the 3rd richest guy in the world, has two sons. Their names are Karan and Jeet. Younger son Jeet, a graduate of the University of Pennsylvania – School of Engineering and Applied Sciences, is the conglomerate’s vice president of group finance.
The new panel of Ambuja Cements has approved an infusion of Rs 20,000 crore in the company through preferential allotment of warrants to equip the company to capture growth in the market. The acquisition of the two cement manufacturing companies is the largest purchase in the infrastructure and materials sector of the nation.
The Adani family, through its special purpose vehicle Endeavor Trade and Investment Ltd, completed the acquisition following the completion of a transaction with Swiss firm Holcim and an offer, according to a statement.
“After the contract, Adani will have 56.69 percent in ACC (of which 50.05 percent will be held through Ambuja Cements), and 63.15 percent in Ambuja Cements, ” the statement said. He added that the combined market capitalization of Ambuja Cements and ACC Ltd is USD 19 billion.
The contract was funded with a total amount of $4.50 billion, which contained Barclays Bank and Deutsche Bank AG.
Thoughts and aims of Adani Regarding the Company
Adani Group chairman Gautam Adani described cement; as an exciting business with room for growth in India, outstripping that of all other countries even beyond 2050.
Cement is an economic play that depends on energy, logistics, and distribution costs and the ability to use a digital platform to transform production and achieve significant supply chain efficiencies.
He added that their position as the world’s largest reusable energy firm would help them to manufacture green cement of the best quality that will work with the circular economy. All these factors will play a major role in becoming the most effective cement manufacturer by 2030.
The panel of Ambuja Cements has approved an infusion of Rs 20,000 crore through preferential allotment of warrants, the report said. “This will equip Ambuja to capture market growth. The move will accelerate value creation for all stakeholders in line with Adani Group’s business philosophy,” he noted. In addition, the Ambuja Cements and ACC Board Committees have been reconstituted in line with Adani’s portfolio management philosophy.
“The Review Board and the Proposal and Compensation Committee are now 100 percent self-governing managements. In addition, two new groups – the Corporate Responsibility Committee and the Public Consumer Committee – have been established, both having 100% independent directors, to deliver a promise to the panel on ESG promises and make the most of customer gratification,” the company said.
Currently, Ambuja Cements and ACC have a joint installed production capacity of 67.5 million tonnes per annum (MTPA). Aditya Birla Group’s UltraTech Cement is the section leader with a fitted capacity of 119.95 MTPA. In May this year, the Adani Group announced that it had agreed for acquiring a controlling stake in Holcim Ltd’s India businesses and an offer to public shareholders for acquiring a 26 percent stake in both companies. The company after the take over aims to achieve all the goals that would make the company the best cement manufacturer.
Initially, the value of the deal was estimated at around $10.5 billion (Rs 81,360 crore), which includes an offer of Rs 31,000 crore. However, the offer, which closed on September 10, received a lukewarm response from investors. It could buy only 8.28 percent of the target shares of ACC Ltd, while only 1.35 percent of shares were listed in Ambuja Cements.