The German building materials company Heidelberg Materials AG holds a 69.39 per cent stake in its Indian subsidiary, which is publicly traded. At current market rates, this stake is valued at approximately Rs 3,437 crore.
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If the sale of a controlling stake proceeds, it would trigger a mandatory open offer for an additional 26 per cent from public shareholders, in accordance with Sebi’s takeover regulations.
However, in a separate statement to stock exchanges, HeidelbergCement stated it was unaware of any such developments.
Earlier, on October 7, The Economic Times reported that the Adani Group was negotiating to acquire Heidelberg’s Indian operations. In a prior report from October 3, 2023, the same publication revealed that Heidelberg had been in bilateral discussions with JSW regarding the sale of its Indian assets.
The potential sale of Heidelberg’s Indian operations comes amid a major wave of consolidation in the country’s cement industry, as companies pursue expansion.
Heidelberg Materials Group entered the Indian market in 2006 by acquiring a controlling interest in Mysore Cements Ltd. Initially, the company formed a joint venture with Indorama Cement Limited, which later became a full acquisition by 2008.
In 2009, Indorama Cement was merged with Mysore Cements and rebranded as HeidelbergCement India Ltd. The same year, the company undertook a brownfield capacity expansion in Central India, increasing its cement production capacity from 2.1 million tonnes per annum to 5.4 mtpa.
Currently, HeidelbergCement India’s total grinding capacity stands at 6.26 mtpa, with an additional 7.1 mtpa capacity under Zuari Cement in India.
For the fiscal year FY24, HeidelbergCement India reported revenues of Rs 2,420.3 crore, reflecting a 6 per cent increase from the previous year’s revenue of Rs 2,283.4 crore. Net profit for FY24 rose sharply to Rs 167.7 crore, marking a 69 per cent jump from the Rs 99.1 crore profit recorded in the previous fiscal year.
This consolidation trend began with Adani Group’s $6.6 billion acquisition of Ambuja Cements and ACC Ltd from Lafarge-Holcim in 2022. More recently, UltraTech Cement, India’s largest cement manufacturer, purchased a controlling 32.7 per cent stake in India Cements for Rs 3,954 crore in July, following an earlier 22.77 per cent stake acquisition in June for Rs 1,889 crore, which the company had labeled as a financial investment at the time.
After acquiring Ambuja and ACC, Adani Group has further strengthened its position as the second-largest player in the industry through a series of smaller acquisitions. These include the purchase of Penna Cement Industries’ 14 million tonnes per annum (mtpa) capacity for an enterprise value of around Rs 10,422 crore and the acquisition of a controlling stake in Sanghi Industries, valued at Rs 5,185 crore.
In August, JSW Cement, which is preparing for an initial public offering, pointed out in its draft papers that over the past five years, the cement sector has seen an extraordinary surge in mergers and acquisitions. This has resulted in the transfer of 106-108 mtpa of capacity, with 95-97 mtpa acquired by major players, compared to only 51-53 mtpa of capacity added through organic expansion.
First Published: Oct 08 2024 | 10:30 AM IST
