Holcim has no plans to merge ACC and Ambuja Cements though it owns over 50 per cent in both the companies. Holcim which had majority stakes in ACC and Ambuja Cements recently increased its stakes in the two companies through the creeping acquisition route to levels just short of 51 per cent. Holcim's equity stake in ACC has increased to 50.10 per cent from 48.32 per cent in end-December and in Ambuja Cements to 50.01 per cent from 45.45 per cent.
With the holdings little short of the 51 per cent in the companies, there has been speculation that Holcim may merge ACC and Ambuja Cements. The firm will not merge the two group companies but it will certainly explore opportunities to further improve its asset footprint and its efficiencies as well as the logistics network.
While the two companies continue as separate entities, Holcim could find ways to leverage on the resulting size to jointly handle issues such as raw material procurement and dispatches, for greater efficiencies. The question about whether ACC and Ambuja Cements will come together into a cement giant arose after the Aditya Birla group put through a similar move in February 2010. Separating its cement business from textile conglomerate Grasim and merging it with group company UltraTech Cement last year, the Birla group created a single entity in UltraTech, which controls 49 million tonnes of cement capacity.
The case of ACC and Ambuja Cements, however, is different as their operations complement rather than overlap with each other. Both operate in separate markets and the possibility of sharing grinding units or other infrastructure is limited. While ACC's operations are concentrated in the southern region, Ambuja Cement's units are spread across North India. On efficiency parameters, Ambuja Cements beats others in the industry including ACC. Ambuja Cements average operating margin is 28-30 per cent; ACC's average margins are 24-25 per cent. ACC and Ambuja Cements together control close to 52 million tonnes of cement capacity. This is a fifth of the close to 275 million tonnes of the Indian cement industry.