Adani Group acquires Holcim for $10.5 billion

The Adani family, after a high-profile acquisition in 2004, has a significant cement capacity of around 70 million barrels per annum for $10.5 billion, following the exit of Holcim from India. Adani said the deal makes it the largest in the infra and materials space.

The buyout will lead to Adani group being the second-largest player in India's cement industry, which has an installed capacity of around 500 million tons. UltraTech with 120 million tons per annum will be the largest by a distance.

The buyout of Holcim's operations in India brings two cement companies to the Adani group, Ambuja Cements and ACC. Holcim has 63.19 per cent in Ambuja and 54.53 per cent in ACC in terms of shareholding. The deal size is taken into account when the deal size is taken into account when the deal size is considered an open offer for the two companies listed.

The buyout of Holcim brings several advantages to the Adani group, according to a strategic point of view. With its play in infrastructure, through ports, power and road, cement complements that and gives it a significant foothold in commodities.

Last June was when it was first made public its plans to enter the cement business and this acquisition will bring scale and quality to the table. Ambuja and ACC have high-quality plants that adhere to environmental standards. A global merger between Holcim and Lafarge saw Ambuja and ACC not increasing their capacity, apart from the reluctance to pick up cement assets in India.

The deal is unlikely to face a serious problem with the Competition Commission of India for Adani, with no readymade operation in cement. The third-largest player in the pecking order will now be Shree Cement, followed by Dalmia.

The Adani group can transport cement from the west coast to the east coast, saving time and money. Being in the power transmission business lends itself to cutting costs in another critical area. This will not take into account the big-ticket foray into renewable energy, where the thrust will be on hydrogen. With the existing FMCG business managing to throw up agro-waste, the focus will be on cutting costs at every point.

ACC is known across the country, while Ambuja is stronger in the north and west. The deal ends up ending any dominance from the international cement players in India, with Heidelberg cement at 12.6 million tons per annum being the only one of any consequence.