International Business

Class Activity
Submitted to:- Prof. Aradhita Deb

Team :- Hatim Mamaji

Rakesh Pradhan
Adarsh Srivastava
Sangem Srikar
 1.You have to select a significant merger or acquisition
Ans. Adani Group Acquired Ambuja Cements Ltd. And ACC Ltd. In 2023

2. Introduction of the selected companies

Ans. Deep Dive into the Companies Involved in the Acquisition:

1. Adani Group:
 Founded in 1988 by Gautam Adani, the Adani Group has grown into a diversified
conglomerate with a presence in:

o Ports: Adani Ports & SEZ Ltd. is India's largest commercial port operator,
handling a significant portion of the country's cargo traffic.
o Energy: Adani Power is the largest private thermal power producer in India,
and the group is also investing in renewable energy sources like solar and
wind.
 o Logistics: Adani Logistics provides integrated logistics solutions, including
warehousing, inland waterways, and multi-modal transportation.
o Other Sectors: The group has expanded into airports, mining, city gas
distribution, and recently, data centres.
 Adani Group is known for its aggressive growth strategy, leveraging acquisitions and
strategic investments.

2. Ambuja Cements:
 Established in 1966, Ambuja Cements is a leading cement producer in India with a
strong brand reputation for quality and reliability.
 It has a national manufacturing network with:
o Integrated Manufacturing Plants: These plants handle the entire cement
production process, from raw material extraction to finished product
packaging.
o Grinding Units: These units grind clinker, a key ingredient in cement, to
produce different cement types for specific applications.
 Ambuja Cements boasts a widespread distribution network reaching dealers and
retailers across India.
3. ACC Limited:
 Founded in 1936, ACC Limited is another major player in the Indian cement industry,
known for its commitment to innovation and high-quality products.
 Similar to Ambuja Cements, ACC has a strong national presence with:
o Integrated Manufacturing Plants: These plants ensure a consistent supply of
cement to meet market demands.
o Ready-Mix Concrete Plants: These plants provide pre-mixed concrete
solutions for construction projects, offering convenience and quality control to
builders.
 ACC has a well-established brand image and a loyal customer base in the construction
sector.
The Significance of the Acquisition:
Adani Group acquired Ambuja and ACC in order to get not just well-known competitors but
also:
• Manufacturing Expertise: Adani's grasp of cement manufacturing and quality control
is strengthened by the combined experience of Ambuja and ACC.
 • Distribution Network: By utilizing the current distribution networks of both cement
companies, the acquisition expands Adani's market share.

• Brand Recognition: Adani's expanding portfolio is enhanced by the solid brand

recognition of ACC and Ambuja.
Through this acquisition, Adani Group makes a major debut into the cement market, putting
them in a competitive position to take advantage of India's expanding infrastructure demands
while also competing with more established firms.

3. Reason/strategy behind the merger or acquisition

Ans. Adani's Strategic Leap: Market Entry, Synergy, and Infrastructure Focus

The Adani Group's acquisition of Ambuja and ACC Cements wasn't just about buying
existing companies; it was a calculated move with three key strategic objectives:

Market Entry and Growth: Prior to this acquisition, Adani wasn't a player in the cement
sector. This deal catapulted them into the second-largest position behind Ultratech Cement.
This rapid market entry offered significant growth potential. Imagine a chessboard where
Adani previously had no pieces in the cement sector. This acquisition gave them a powerful
set of knights (Ambuja and ACC) to maneuver and compete for market share.

2. Synergy and Efficiency: Ambuja and ACC contributed a broad nationwide manufacturing
network, well-established cement production and quality control experience. A synergy is
created when this is combined with Adani's current logistics strengths (ports, railroads).
Envision bringing together an expert chef (Ambuja/ACC), a fully supplied pantry, and a
streamlined delivery system (Adani Logistics). This kind of cooperation can result in more
efficient operations, lower transportation expenses, and even quicker cement delivery dates.

3. Infrastructure Focus: The foundation of all infrastructure development, including

buildings, power plants, and bridges, is cement. The Adani Group, which is involved in ports,
energy, and logistics, is heavily focused on this industry. Adani obtains a reliable and maybe
less expensive source of this essential material for its own infrastructure projects by
controlling the production of cement. Consider Adani, a construction company that produces
its own cement and bricks in addition to building. Adani may be able to enhance cost
management and project timeliness through this vertical integration.

These three goals are connected to one another. Adani gains a foothold in the market through
market access, operational optimisation is facilitated by synergy, and the infrastructure focus
makes the most of the assets purchased to drive growth in the company's core industries.
Although long-term success is still to be seen, this acquisition demonstrates Adani's strategic
thinking and ambition to become a major player in India's development story.

4. Status of the business operation after acquisition

Ans. Taking a reference from the news article by business standard

“Post Adani takeover, ACC-Ambuja Cement Ebitda rises to Rs 1,350/tonne”

• After Adani Group taking over ACC and Ambuja Cement, the EBITDA has risen to
Rs 1,350 per tonne from Rs 350 and the group is looking to scale it up to Rs 1,400 by
2024.
 • Ambuja Cement has a cement capacity of 31 million tonne per annum with 6
integrated cement manufacturing plants and 8 cement grinding units across the
country. ACC has a cement capacity of 34.45 million tonne with 17 cement
manufacturing units, 85 ready-mix concrete plants.

• The acquisition placed Adani in direct competition with Ultratech Cement, India's
largest cement manufacturer. And Adani Group is now planning to double the annual
cement making capacity by 2027.

• The group is looking to achieve a sale of 120 million tonne by March 2028. The target
is to achieve a topline of Rs 70,000 crore and EBITDA of Rs 17,500 crore. At those
levels, the EBITDA per tonne will be close to Rs 1,450 which translates to a margin
of about 25 per cent.

• The recent Sanghi Cement acquisition added 6.1 million tonne of cement capacity, 6.6
million tonne of clinker capacity and 1.1 billion tonne of limestone reserves - enough
to cater to additional production of 24 million tonne per annum of cement.

• the group has a capex outlook of about Rs 46,000 crore over the next five years for
both organic and inorganic growth in the cement sector.

• It will set up greenfield and brownfield projects as well as carry out debottlenecking
in existing units to unlock and increase capacity without incurring heavy capex.

.5. Justify whether the merger or the acquisition was a success or a failure

Ans. The acquisition of Ambuja Cements and ACC is the largest acquisition ever
by the Adani Group, and India’s largest ever in the infrastructure and materials
space.

Gautam Adani said that he is confident of becoming the largest and most efficient
manufacturer of cement by 2030.

“What makes cement an exciting business is a headroom for growth in India,

which exceeds that of every other country well beyond 2050,” Adani said in a
statement. “Our position as one of the largest renewable energy companies in the
world will help us manufacture premium quality green cement well in line with the
principles of a circular economy.”
References

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