Holcim says no to further buyouts, ACC price hike

DSP Merrill Lynch Joint Managing Director Rajeev Gupta said the $100 per tonne valuation of ACC, done by Holcim is itself stretched and there is no question of revising the open offer price. He terms the recent rally in the ACC share price as driven by speculation about competitive bids from other players. DSP Merrill Lynch was the advisor to Holcim for the recent deal.

“The cement industry in India is still fragmented, which prevents building of shareholder value. It has a tendency to develop over-capacity over time and that leads to fall in prices, as has happened in southern India. It is clear that Holcim does not plan to build more capacities to grow faster than the market and disturb the balance.” He added that Holcim is aware of the above problems in the industry and hence the company’s ambition is to grow with the market with a conservative approach.

Gupta termed the reports in the media about Holcim bringing another $1 billion into India, as a “misunderstanding”. He clarified that $800 million is what Holcim is bringing into the country.

Globally, Holcim has a practice of making decisions using the knowledge of local partners. Gupta pointed out that whatever decisions the company takes in India, will be in consultation with ACC. However, he admitted that Holcim will participate in the decision-making as a stakeholder. Holcim is keen on the Indian market because of the 6-7 per cent growth here as against the 4-5 per cent in Europe.

Regarding the possibility of an open offer to shareholders of Everest Industries Ltd (EIL), a subsidiary of ACC, Gupta informed that Holcim does not want to take control of EIL. If it manages to get control over ACC, then it will look into the issue of whether an open offer to EIL shareholders is required, in consultation with Sebi.