A win-win deal with Holcim Handsome exit price, non-compete free

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The association with Holcim is bound to sharpen Gujarat Ambuja's edge as the most efficient player in the cement industry in the country.

Mr Anil Singhvi
Mr Anil Singhvi

S. Vaidya Nathan

YOU have had a strategic stake in ACC for close to five years. What is the idea behind retaining your stake at 14.4 per cent? Is ACC still not vulnerable to a bid by multinational companies?

Yes. Even Gujarat Ambuja could be vulnerable to a hostile bid. Why not? The Sekhsaria's holding in the company is only 24 per cent. Our holding of 14.4 per cent is not by design. It so happened that the Tatas had that stake and we bought their holding. Nothing more than that.

If an MNC were to make a bid, would you be willing to sell your stake?

If we get a good price and value for our money, we would take it and sell. Why not? If somebody pays Rs 1,000 a share for Ambuja, I would sell Ambuja also. Have I been able to give that reply very clearly? (repeats the willingness to sell Ambuja). Business is run with passion and not emotion. Most businesses in India are unfortunately run with emotion; they are left with just emotion and no business.

Does this also represent the views of the promoters?

I don't think I would have opened my mouth if I did not know the views of the promoters: that is, if you get a good price, say Rs 1,000, which is three times at which the stock trades today, then sell. Why not?

That was Mr Anil Singhvi in an interview to

Business Line

in October 2004. Then the Executive Director (Finance), he is now the Managing Director of Gujarat Ambuja Cements under the auspices of Holcim. In early 2005, Gujarat Ambuja entered into a strategic alliance with Holcim, which enabled the latter to acquire control of Ambuja Cement Eastern and a stake of close to 35 per cent in ACC.

Today's development indicates that the sale of the promoter's stake in Gujarat Ambuja Cements has been completed at an attractive price. On an enterprise value per tonne basis, the exit price is a handsome one for the promoters. The non-compete fee further enhances the attractiveness of the deal for the promoters.

The association with Holcim is bound to sharpen Gujarat Ambuja's edge as the most efficient player in the cement industry in India. Holcim may also not be averse to a merger of Gujarat Ambuja and ACC, as that may enable it fast-track the payoffs for its investments in India over the past 12 months.

Holcim has invested close to $2 billion over the past 12 months in India to pip other global majors and has now gained an edge that will be tough to match for the likes of Lafarge, Italcementi and Cemex. At every stage, the deals have created value for shareholders of Gujarat Ambuja Cements, and this time, too, it is no different.

Related Stories:
Holcim's expertise at GACL disposal virtually free: Singhvi

(This article was published in the Business Line print edition dated January 31, 2006)
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