HomeBusinessAdani names son Karan to run cement firm; ₹20,000 crore investment...

Adani names son Karan to run cement firm; ₹20,000 crore investment in Ambuja Cement

Karan, son of billionaire Gautam Adani, will lead the cement firms that his conglomerate has acquired to become India’s second largest cement player and expand his empire spanning from ports and energy to airports and telecommunications.

In a media statement, Adani Group announced the completion of the acquisition of Ambuja Cements and ACC for a total consideration of $6.5 billion, which includes the state’s purchase of Swiss major Holcim in the two firms and the latter’s open offer to minority shareholders. .

Soon after the acquisition of Adani, the two cement firms announced the resignation of their boards of directors, including the CEO and CFO.

The group named its founder chairman Gautam Adani as the head of Ambuja Cements. His son Karan, who is currently the head of the group’s port business, was named as the director of both the cement firms and the chairman of ACC Ltd.

The Adani Group also soon nominated independent directors to the boards of both the firms. These included Rajnish Kumar, former chairman of State Bank of India (SBI) on the Ambuja Cement board and Nitin Shukla, former head of Shell India on the ACC board.

It named Ajay Kumar as the new CEO of Ambuja Cement in place of Neeraj Akhouri and Sridhar Balakrishnan for ACC.

Karan, 35, is a graduate in economics from Purdue University, US, and oversees Adani Ports and SEZ Ltd, which has grown from two ports to 10 ports and terminals.

60-year-old Gautam Adani, the third richest person in the world, has two sons, Karan and Jeet. Younger son Jeet, a graduate of the University of Pennsylvania – School of Engineering and Applied Sciences, is vice president of group finance at the group.

The new board of Ambuja Cements approved an investment of Rs 20,000 crore in the company by way of preferential allotment of warrants to prepare the firm “to capture the growth in the market”. The acquisition of the two cement firms is the largest ever purchase in the infrastructure and materials sector in the country and also the largest acquisition by Adani.

According to a statement, the Adani family completed the acquisition after completing transactions with Swiss firm Holcim and Open Offer through its special purpose vehicle Endeavor Trade and Investment Ltd.

“After the transaction, Adani will hold 63.15 per cent in Ambuja Cements and 56.69 per cent in ACC (of which 50.05% will be held through Ambuja Cements),” the statement said.

The combined market capitalization of Ambuja Cements and ACC Limited so far is $19 billion.

“The deal was financed by facilities totaling $4.50 billion received from 14 international banks”, including Barclays Bank and Deutsche Bank AG.

Adani Group Chairman Gautam Adani described cement as an exciting business that has headroom for growth in India, which exceeds that of every other country beyond 2050.

Cement is a game of economics dependent on energy costs, logistics and distribution costs, and has the potential to leverage a digital platform to transform production as well as achieve significant supply chain efficiencies, he said.

“Furthermore, our position as one of the largest renewable energy companies in the world will help us manufacture premium quality green cement in line with the principles of a circular economy. All these dimensions have enabled us to become the largest and the largest. By 2030, there will be no efficient producer of cement.

The board of Ambuja Cements approved an investment of Rs 20,000 crore through preferential allotment of warrants, the statement said.

“This will prepare Ambuja to capture the growth in the market. The action will significantly accelerate value creation for all stakeholders in line with the business philosophy of the Adani Group.”

In addition, the board committees of both Ambuja Cements and ACC have been reconstituted in line with the governance philosophy of the Adani portfolio.

“The Audit Committee and the Nomination and Remuneration Committee now consist of 100 per cent independent directors. In addition, two new committees have been formed – the Corporate Responsibility Committee and the Public Consumers Committee – to provide assurances to the Board in both being 100% independent. Directors include ESG commitments and maximize consumer satisfaction.”

At present, the combined installed production capacity of Ambuja Cements and ACC is 67.5 million tonnes per annum (MTPA). Aditya Birla Group firm UltraTech Cement is a segment leader with an installed capacity of 119.95 MTPA.

In May this year, the Adani Group announced that it had struck a deal to acquire a controlling stake in Holcim Ltd’s business in India and subsequently offered public shareholders to acquire a 26% stake in both companies.

Initially, the deal was valued at around $10.5 billion (₹81,360 crore), which includes an open offer of ₹31,000 crore.

However, the open offer, which closed on September 10, received a mild response from investors. It could buy only 8.28% of the targeted shares in ACC Ltd. whereas in Ambuja Cements only 1.35% of the shares were tendered.

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