NCLT Approves Merger Of Adani Cementation With Ambuja Cements
The National Company Law Tribunal (NCLT) has approved the merger of Adani Cementation with Ambuja Cements, a strategic move that will consolidate Adani Group’s cement business under one unit and bring synergistic benefits.
In a significant development, the Ahmedabad bench of the NCLT, on July 18, sanctioned the Scheme of Amalgamation of Adani Cementation with Ambuja Cements, paving the way for the creation of a cement giant in India.
A Brief Background
Earlier in June 2024, the billionaire Gautam Adani-led group announced a merger and ownership restructuring of its cement assets, which are housed under Ambuja Cements and Adani Cementation, part of Adani Enterprises.
The intergroup merger is based on share swapping, and Adani Enterprises Ltd. will get 8.7 million shares of Ambuja Cements.
Rationale Behind the Merger
The merger is expected to lead to enhanced value addition for both companies, and consequently, the value of the shareholders will increase.
It will help Ambuja Cement to absorb the cement business of Adani Cementation, which will help it to enhance its manufacturing capacity more efficiently, seamlessly and economically.
Besides, it will also help in improved utilisation of the combined resources of both companies, lowering the overheads and reducing compliance requirements.
Benefits of the Merger
The amalgamation will help the transferee company to quickly start the construction activity at various sites of the transferor company and that of the wholly-owned subsidiary of the transferor company.
Adani Cementation has lease rights of limestone mines, with resources of about 275 million tonnes at Lakhpat, Gujarat.
It has also proposed to set up a manufacturing unit at Raigad, Maharashtra.
Impact on the Indian Cement Industry
The merger is likely to have a significant impact on the Indian cement industry, which is led by Aditya Birla Group firm UltraTech Cement Ltd., which has a consolidated capacity of 192.26 MTPA.
With the consolidation of Adani Group’s cement business under one unit, the merged entity will become a major player in the Indian cement market.
The Indian cement market is expected to continue its growth trajectory in the coming years, driven by government initiatives such as the infrastructure development and housing schemes.
Conclusion
The NCLT’s approval of the merger of Adani Cementation with Ambuja Cements is a significant development for the Indian cement industry, which is likely to lead to increased competition and better services for customers.
The merger will also provide a platform for Adani Group to expand its cement business and increase its market share in the country.
