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Home News Swiss firm Holcim restructures India ops to save costs

Swiss firm Holcim restructures India ops to save costs

Published on 25/07/2013

Shares of India's Ambuja Cements and ACC slumped Thursday after their parent company, Swiss cement giant Holcim, announced a restructuring of Indian operations aimed at lowering costs.

The deal comes at a time when Indian cement firms are facing sluggish growth, due to a drop in demand from the building and infrastructure sectors.

Ambuja plunged 14.55 percent to a low of 163.2 rupees while ACC fell 6.17 percent to 1,155 rupees, on concerns over future earnings growth and the deal valuation.

Holcim said late Wednesday that it will raise its stake in Ambuja Cements to 61.39 percent, from the current 50.55 percent, receiving $600 million in cash from Ambuja.

In turn, Ambuja will buy Holcim’s 50.1 percent stake in ACC.

The two-phased deal could generate savings of nine billion rupees ($150 million) per annum, the Zurich-based firm said a statement on its website.

India is Holcim’s biggest market, making up around a third of its total sales.

Ambuja will become the flagship firm for Holcim’s India operations while ACC will remain a subsidiary.

Both will continue to operate as listed independent firms, Holcim said.

“This transaction further improves Holcim’s holding structure in India, strengthens the platform for future growth,” the Swiss firm said.

“In these times, we need every possible cost saving we can achieve,” Onne Van Der Weijde, managing director of Ambuja Cements told reporters in a conference call on Wednesday.

“If you cannot get external growth, then you look internally.”

Holcim also said the savings, which will be realised in a phased manner over two years, will be shared by both ACC and Ambuja equally.