In a significant development in the Indian cement industry, Ambuja Cements Ltd, a part of the Adani Group, has received a 'no objection' observation letter from the National Stock Exchange (NSE) and 'no adverse observations' from the Bombay Stock Exchange (BSE) concerning its merger with Adani Cementation Ltd. This development, announced on January 2, 2025, marks a crucial step in the merger process, which had received approval from the board in June 2024.

The merger scheme, however, remains subject to various statutory and regulatory approvals, including those from the respective shareholders and creditors of the companies involved. The stock exchange circular dated January 1, 2025, stated, Based on the draft scheme and other documents submitted by the Company, including undertaking given in terms of Regulation 11 of SEBI Regulations, 2015, we hereby convey our "No objection" in terms of Regulation 37 of SEBI Regulations, 2015, to enable the Company to file the draft scheme with NCLT.

Strategic Growth and Acquisition Plans

This merger is a strategic move for Ambuja Cement, the cement arm of the Adani Group, which is poised for robust growth. The company has set an ambitious target of reaching a production capacity of 140 million tonnes per annum (MTPA) by 2028. This merger is expected to boost efficiency, enhance competitive strength, and simplify compliance processes, thereby facilitating the company's growth trajectory.

To achieve this ambitious target, Ambuja Cement has been actively pursuing acquisitions. In October 2024, the company acquired Orient Cement Ltd (OCL) at an equity value of Rs 8,100 crore. This acquisition, fully funded through internal accruals, involved the purchase of 46.8 per cent shares of OCL from its current promoters and certain public shareholders. OCL's efficient plants, highly motivated teams, strong balance sheet, and well-distributed dealer network are expected to be excellent additions to the Adani Group's existing cement business.

Impressive Performance and Future Prospects

With its subsidiaries ACC Ltd, Penna Cement Industries Ltd, and Sanghi Industries Ltd, Ambuja has taken the Adani Group's cement capacity to 88.9 MTPA. The group now boasts 20 integrated cement manufacturing plants, 20 cement grinding units, and 12 bulk terminals across the country. On the day of the announcement, Ambuja Cements shares were trading at Rs 545.60, up 1.30 per cent.

The company's recent performance has been impressive. In the second quarter, Ambuja Cements clocked its highest quarterly revenue of Rs 7,516 crore. The company saw volume growth of 9 per cent YoY, at 14.2 MTPA, the highest volume in the Q2 series in the last five years. The net worth increased by Rs 450 crore during the quarter and stands at Rs 59,916 crore. The company remains debt-free and continues to maintain Crisil AAA (stable) and Crisil A1+ ratings.

The company anticipates strong infrastructure demand and ongoing needs from the housing and commercial sectors to boost cement demand in H2 FY25. Strategic investments in roads, railways, along with urban and commercial amenities, are expected to drive robust growth. The company expects demand during FY25 to grow in the range of 4-5 per cent.