Mumbai/Hyderabad: In a move to solidify its position in the southern Indian market, Ambuja Cements has entered into an agreement to acquire the Tamil Nadu cement grinding unit of My Home Group for approximately Rs 414 crore. This acquisition marks the third purchase by Ambuja Cements since its acquisition by the Adani Group.
Expanding Capacity and Market Reach
The My Home Group’s cement grinding unit, located in Tuticorin, Tamil Nadu, boasts an annual capacity of 1.5 million tonnes. This acquisition will significantly boost Ambuja Cements’ total capacity to 78.9 million tonnes, further solidifying its position as India’s second-largest cement producer, following closely behind Aditya Birla Group’s UltraTech Cement.
Financing for the acquisition will be facilitated through Ambuja Cements’ internal accruals, as per company statements. Additionally, the company, led by CEO Ajay Kapur, has confirmed that the deal will include the retention of the Tuticorin unit’s existing workforce of 70 employees.
My Home Group: A Diversified Business Landscape
The My Home Group, headquartered in Hyderabad, is a multifaceted organization with interests spanning construction and media sectors. The group is led by billionaire businessman Jupally Rameswar Rao. Following the sale of the Tamil Nadu unit, My Home Group will retain ownership of three cement plants situated in Telangana and Andhra Pradesh. These plants contribute to an annual production of 11 million tonnes of building materials marketed under the brand name Maha Cement. Notably, My Home Group operates its cement business through an equity partnership with the Irish major CRH.
Beyond the cement sector, the My Home Group’s portfolio extends to ownership of TV9 news channels and Megha Engineering. Megha Engineering garnered significant media attention after emerging as the second-highest buyer of electoral bonds, with a purchase value of Rs 966 crore.
Strategic Sale Driven by Commercial Considerations
Sources close to the deal suggest that My Home Group’s decision to sell the Tuticorin unit was primarily driven by commercial factors. The unit’s geographical location, distant from its core markets in Telangana, Andhra Pradesh, and Odisha, resulted in substantial freight costs, hindering its overall performance.
Strategic Advantages for Ambuja Cements
The Tuticorin plant, encompassing 61 acres of land, offers a significant advantage to Ambuja Cements thanks to a long-term fly ash supply agreement that secures a reliable source of raw materials. This strategic acquisition allows Ambuja Cements to:
Expand its footprint in the southern Indian market: The acquisition grants Ambuja Cements a stronger presence in the high-demand southern market, enabling them to cater to a wider customer base and potentially increase market share.
Enhance production capacity: The additional 1.5 million tonnes of annual capacity from the Tuticorin unit bolsters Ambuja Cements’ overall production capabilities, solidifying its position as a leading cement producer in India.
Optimize operational efficiency: The long-term fly ash supply agreement associated with the Tuticorin plant presents a cost-effective solution for raw material procurement, potentially streamlining operations and improving profit margins.
Retain experienced personnel: By retaining the existing workforce of the Tuticorin unit, Ambuja Cements gains a team with established expertise and knowledge of the local market, facilitating a smoother integration process.
The acquisition of My Home Group’s Tamil Nadu cement grinding unit by Ambuja Cements signifies a strategic move to strengthen its southern market presence, enhance production capacity, and optimize operational efficiency. This development is likely to reshape the competitive landscape of the Indian cement industry.
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