Aditya Birla Group company, UltraTech Cement has placed its bid for acquiring Holcim stake in Ambuja Cement-ACC combine and has emerged as the formidable contender for the prized asset.
Being a leading player in most of the markets where Ambuja-ACC has presence, UltraTech has got favourable legal opinion to overcome the hurdle of receiving Competition Commission of India approval, if at all it emerges as the winning bidder, sources said.
Ambuja has a grinding capacity of 31 mtpa and plans to expand it to 40 mtpa in the next two years. About 42 per cent of its grinding capacities are in the north, followed by 28 per cent, 26 per cent and 5 per cent in the west, east and central regions.
Similarly, ACC has a grinding capacity of 35 mtpa, which is being expanded to 40 mtpa by the first half of 2023. Post-completion of the ongoing expansion, ACC will have 23-27 per cent grinding capacities in the east, south and central regions, and 15 per cent and 10 per cent capacity in the north and western regions.
“UltraTech will present a credible divestiture plan,” sources said.
CCI Act describes a dominant player as an one or more undertakings having power in a particular market to determine economic parameters such as price, supply, the amount of production and distribution, by acting independently of their competitors and customers.
The bidding for the 63 per cent Holcim stake will be keenly contested with world's largest steel company ArcelorMittal entering the fray along with Adani Cement and JSW Cement.
Holcim, which has presence in 90 countries, entered the Indian market 17 years ago by buying stake in these two companies. Despite facing challenges, Ambuja Cement and ACC has been sought after by investors for being the second and third largest player in cement sector and paying liberal dividend on a regular basis.