Adani Group to acquire CK Birla group firm Orient Cement at Rs 8,100 cr valuation

NEW DELHI: Adani Group on Tuesday said it has agreed to acquire CK Birla group firm Orient Cement Ltd in a deal valued at Rs 8,100 crore, as billionaire Gautam Adani-run conglomerate snaps up smaller rivals to challenge India’s top cement maker UltraTech.

Ambuja Cement, India’s No.2 cement maker, will buy 46.8 per cent of its founders including chairman CK Birla, and certain public shareholders for Rs 3,791 crore. This would trigger an open offer for an additional 26 per cent stake in Orient, according to a company statement.

Orient, which has two cement plants in the south and one in western India, will be Ambuja’s second acquisition this year.

It will add 8.5 million tonnes to take Ambuja’s operational capacity to 97.4 million tonnes. The Adani group has plans in the works to raise this to 140 million tonnes a year by 2028, just a shade below market leader UltraTech’s current capacity of 149.5 million tonnes (154.9 million tonnes after including overseas plans).

While Adani group snapped Hyderabad-based Penna Cement for Rs 10,422 crore in June this year and had acquired Saurashtra-based Sanghi Industries Ltd for Rs 5,185 crore in December last year, Aditya Birla group flagship UltraTech Cement had in July bought India Cements for Rs 3,945 crore.

Ambuja said it would pay Rs 395.40 per share for Orient, which will add 2 per cent to its market share.

Besides 8.5 million tonnes per annum of operational capacity, near debt-free Orient has another 8.1 million tonnes ready-to-execute projects. Plus, a high quality limestone mine at Chittorgarh in Rajasthan can support additional 6 million tonnes cement capacity.

In the statement, Ambuja Cements, the cement and building material company of Adani Cement and part of the diversified Adani Group, announced the signing of a binding agreement for the acquisition of Orient Cement Ltd (OCL) at an equity value of Rs 8,100 crore.

The acquisition will be fully funded through internal accruals.

“This timed acquisition marks another significant step forward in Ambuja Cements’ accelerated growth journey, increasing cement capacity by 30 million tonnes per annum within two years of Ambuja’s acquisition,” said Karan Adani, Director of Ambuja Cements.

“By acquiring OCL, Ambuja is poised to reach 100 million tonnes cement capacity in FY25. The acquisition will help to expand Adani Cement’s presence in core markets and improve its pan-India market share by 2 per cent.” OCL’s assets, he said, are “highly efficient, equipped with railway sidings and well supported by captive power plants, renewable energy, WHRS and AFR facilities”.

“OCL’s strategic locations, high-quality limestone reserves and requisite statutory approvals present an opportunity to increase cement capacity in the near term to 16.6 million tonnes per annum,” he said.

CK Birla, Chairman of Orient Cement and the CK Birla Group, said, “The CK Birla Group is continuously reallocating capital to sharpen its focus on consumer centric, technology driven and service-based businesses.” Amita Birla, co-chairman, CK Birla Group, added, “Orient Cement has a strong market presence, with sustainability initiatives, particularly in renewable energy, being a significant part of its DNA. I am convinced that Ambuja Cements is the right home for all our colleagues at Orient Cement, as well as our customers.” Besides having limestone mining lease in Chittorgarh for setting up an integrated unit with clinker of 4 million tonnes and a split grinding unit of 6 million tonnes in north India, OCL has also secured a concession from MPPGCL, Madhya Pradesh for setting up a grinding unit within the premises of Satpura thermal power plant.

“Both these complement the Adani Group’s existing cement footprint,” It added.

Adani Group entered into the cement sector in September 2022 after acquiring controlling stakes in Ambuja Cement from Swiss firm Holcim for cash proceeds of USD 6.4 billion (about Rs 51,000 crore). Ambuja Cements owns a 51 per cent stake in ACC Ltd.

Later it also launched a Rs 31,000-crore open offer for the acquisition of 26 per cent additional stakes from public shareholders.

According to data from the Cement Manufacturers Association, the country has a total of 541 metric tonnes of installed cement capacity.