Heidelberg Materials AG’s Indian cement assets have drawn interest from top conglomerates, including Adani Group’s Ambuja Cements, Aditya Birla’s UltraTech Cement, JSW Group’s cement arm, and Dalmia Bharat Group, which are holding separate talks to buy HeidelbergCement India Ltd, people familiar with the matter said.
The German building materials maker currently owns a 69.39 percent stake in HeidelbergCement India, which is listed on local stock exchanges. Heidelberg’s stake is worth about Rs 3,437 crore at the current market price.
A controlling stake sale will trigger a mandatory open offer under SEBI’s takeover norms, for acquiring an additional 26 percent from public shareholders.
A Heidelberg spokesperson said that the company does not comment on speculation. In a separate statement to stock exchanges HeidelbergCement said that it is unaware about any such development, adding that it does not comment on market speculations.
Emails sent to spokespeople for Adani, Ultratech Cement, JSW Cement and Dalmia Bharat remained unanswered till press time.
Earlier today on October 7, The Economic Times reported that Adani group was in talks to acquire Heidelberg's India assets. Last year on October 3, 2023, The Economic Times had reported that Heidelberg was engaged in bilateral talks with JSW for the sale of its Indian assets.
Heidelberg’s Indian asset sale comes amid an unprecedented wave of consolidation in the Indian cement sector, driven by the pursuit of scale.
The consolidation was triggered by Adani group’s $6.6 billion acquisition of Ambuja Cements and ACC Ltd in 2022 from Lafarge-Holcim. More recently India’s biggest cement maker UltraTech Cement acquired a controlling stake in India Cements by purchasing a 32.7 percent stake for Rs 3,954 crore in July. This move followed an earlier purchase of 22.77 percent stake in India Cements in June for Rs 1,889 crore, which UltraTech Cement had at the time declared as a purely financial investment.
After its Ambuja-ACC acquisition, Adani has continued to cement its number two position in the industry with a spate of smaller acquisitions, including the purchase of 14 million tonnes per annum (mtpa) capacity of Penna Cement Industries for an enterprise valuation of around Rs 10,422 crore and the acquisition of a controlling stake in Sanghi Industries at an enterprise valuation of Rs 5,185 crore.
JSW Cements, which in August filed the draft papers for its IPO, noted that over the past five years, the sector has witnessed an unparalleled surge in mergers and acquisitions, resulting in the transfer of 106-108 mtpa of capacity, of which 95-97 mtpa have been acquired by large players. On the other hand, large players have installed only 51-53 mtpa of capacity via the organic route.
“Companies have been preferring inorganic way of expansion rather than organic route due to the lengthy gestation period involved in setting up new plants, which can take three to four years. Additionally, it makes it simple to enter an established market, expanding their geographic reach. Inorganic approach to expansion eliminates the entire hassle of finding the site, purchasing land, and delays in regulatory approvals. The top five players have been gaining market share over the last five years through various acquisitions,” the JSW Cement draft IPO papers state.
HeidelbergCement India biz
Heidelberg Materials Group entered the Indian market in early 2006 by acquiring a controlling stake in Mysore Cements Limited and initially formed a joint venture with Indorama Cement Limited, which evolved into a full acquisition by 2008.
Following the merger of Indorama Cement with Mysore Cements in 2009, the company was rebranded as HeidelbergCement India Ltd. In the same year, the company embarked on a brownfield capacity expansion in Central India, boosting its cement manufacturing capacity from 2.1 million tonnes per annum to 5.4 mtpa.
HeidelbergCements’s (the listed entity) total cement grinding capacity stands at 6.26 MTPA. Heidelberg also has another 7.1 mtpa capacity in India housed under Zuari Cement.
For FY24, HeidelbergCement recorded a revenue of Rs 2,420.3 crore, up by 6 percent from the revenue of Rs2,283.4 crore in the previous fiscal.
Net profit for FY24 stood at Rs 167.7 crore, witnessing a sharp rise of 69 percent over the profit of Rs 99.1 crore in the previous fiscal.
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