Adani Acquires Orient Cement for Rs 8,100 Cr, Aims 100+ MTPA Capacity by FY 25

Ambuja Cements, a subsidiary of Adani Cement and part of the Adani Group, announced on Tuesday that it has signed a binding agreement to acquire a 46.8% stake in Orient Cement Ltd (OCL) for an equity value of Rs 8,100 crore. This strategic acquisition aligns with Ambuja's ambitious goal of achieving a cement capacity of 140 million tonnes per annum (MTPA) by 2028.

The deal will be entirely funded through Ambuja's internal accruals, ensuring that the company maintains its debt-free status. Following the acquisition, Ambuja is expected to boost its cement capacity by approximately 30 MTPA within two years, aiming to reach an operational capacity of 100 MTPA by FY 2025.

This acquisition not only enhances Ambuja's production capabilities but also strengthens Adani Cement's pan-India market share, adding an estimated 2% to its existing stake in the cement industry.

OCL contributes an existing clinker capacity of 5.6 MTPA and an operational cement capacity of 8.5 MTPA, along with valuable assets such as a 95 MW captive power plant (CPP), a 10 MW waste heat recovery system (WHRS), and 33 MW of renewable energy spread across Telangana, Karnataka, and Maharashtra.

Karan Adani, Director of Ambuja Cements, commented on the acquisition, stating, "This timed acquisition marks another significant step forward in Ambuja Cements' accelerated growth journey. By acquiring OCL, Ambuja is poised to reach 100 MTPA cement capacity in FY 2025. This acquisition will help expand Adani Cement's presence in core markets and improve its pan-India market share by 2%."

Adani emphasized OCL's efficient assets, which are equipped with railway sidings and supported by captive power plants, renewable energy, WHRS, and alternative fuel resources (AFR) facilities. He noted that OCL's strategic locations and high-quality limestone reserves present a compelling opportunity to enhance cement capacity to 16.6 MTPA in the near term.

OCL has also secured a concession from Madhya Pradesh Power Generating Company Ltd (MPPGCL) to establish a 2.0 MTPA grinding unit within the premises of the Satpura Thermal Power Station in Sarni, Madhya Pradesh. Additionally, its high-quality limestone mining lease in Chittorgarh, Rajasthan, opens avenues for establishing another 6 MTPA cement capacity in North India.

CK Birla, Chairman of Orient Cement and the CK Birla Group, expressed confidence in the transition, stating, "The CK Birla Group is continuously reallocating capital to sharpen its focus on consumer-centric, technology-driven, and service-based businesses. I take pride in Orient Cement's impressive track record of building premium brands and maintaining a leading market share in the geographies it operates in. We are confident that the Adani Group, with its strong focus on cement and infrastructure, is the ideal new owner to drive continued growth at Orient Cement for our people and stakeholders."

Amita Birla, Co-Chairman of the 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."

OCL has recently commissioned a waste heat recovery system in Chittapur IU and is in the final stages of commissioning 16 MW solar power in Chittapur and 3.7 MW solar power in Jalgaon. The efficient plants, motivated teams, strong balance sheet, and well-distributed dealer network of OCL are expected to be excellent additions to the Adani Group's existing cement business. OCL's existing dealers will transition to Adani Cement's market network, creating formidable synergies.

Ambuja plans to optimize OCL's overall capacity utilization to enhance cost efficiency and competitiveness while improving operational performance by leveraging synergies inherent in the existing cement business.

Also Read: Gautam Adani Tops Wealth Gainers in Forbes India Rich List 2024