Adani family infuses Rs 6,661 cr in Ambuja Cements, raises stake to 66.7%

The Adani group has infused Rs 6,661 crore in Ambuja Cements by converting 21.20 crore warrants into shares, raising its stake in the country's second-largest cement company by 3.6 per cent to 66.7 per cent.

The board of Ambuja Cements has approved the conversion of 21.20 crore warrants into shares of promoter entity Harmonia Trade and Investment at the rate of Rs 314.15 per share.

The fund's infusion will be instrumental for the cement business of the Adani group, which has plans to enhance its capacity to 140 million tonnes per annum by 2028, according to a statement from billionaire Gautam Adani-owned Ambuja Cements.

This investment follows an infusion of Rs 5,000 crore by the promoter into the company for exercising the warrants issuance approved by the board in October 2022.

"With this, the Adani family have increased their stake in the company by 3.6 per cent to attain 66.7 per cent holding," said Ambuja Cements which also owns a controlling stake in another cement firm ACC Ltd.

On October 18, 2022, Ambuja Cements allotted 47.74 crore convertible warrants to Harmonia, a member of the promoter group of the Company, at an initial subscription amount of Rs 104.72 per warrant, which was 25 per cent of the issue price of Rs 418.87.

Now Harmonia, as per the terms of allotment of the warrants, has opted to convert 21.20 crore warrants into equity shares of Ambuja Cements having a face value of Rs 2 each.

On Thursday, the board of the Ambuja Cements "at its meeting held on March 28 2024, considered and approved the allotment of 21.20 crore equity shares of the Company of the face value of Rs 2 each, at a premium of Rs 416.87 per share, pursuant to the exercise and conversion of 212,030,758 convertible warrants against receipt of the balance subscription amount of Rs 314.15 per warrant (i.e. 75 per cent of the issue price), to Harmonia", the statement said.

With this, promoters have infused Rs 11,661 crore in Ambuja post-acquisition, giving Ambuja capital flexibility for accelerated growth, capital management initiatives and best-in-class balance sheet strength to accomplish its various strategic initiatives, it said.

"The additional investment will fortify the company's financial position, providing it with enhanced capabilities to pursue its ambitious growth plans and capitalize on emerging opportunities in the market," it said.

This investment shall also be instrumental in fuelling various strategic initiatives including undertaking debottlenecking capex to enhance operational capabilities to ensure scalability as well as bringing efficiencies across resources, and supply chain.

"This shall also drive innovation and product enhancement through advanced technology integration for better service offerings to tap the growing requirements of the sector," it said.

Ambuja Cements CEO Ajay Kapur said this infusion of funds provides "flexibility for fast-tracked growth, capital management initiatives and best-in-class balance sheet strength".

"It is not only the testament to steadfast belief in our vision and business model but also reinforces our commitment to delivering long-term sustainable value creation to our stakeholders and this shall propel us towards setting new benchmarks accelerating our growth and continue to deliver on operational excellence, business synergies and cost leadership," he said.

Ambuja, with its subsidiaries ACC Ltd, has the capacity to produce 77.4 million tonnes of cements annually from 18 integrated cement manufacturing plants and 18 cement grinding units across the country. It had recently acquired Sanghi Industries Ltd.

In September 2022, Adani group has acquired controlling stakes of Ambuja Cement from Swiss firm Holcim for cash proceeds of USD 6.4 billion (about Rs 51,000 crore). Later it had also launched a Rs 31,000 crore open offer for the acquisition of 26 per cent additional stakes from public shareholders.