One of the oldest and most trusted Indian cement brands - Ambuja Cements - reported a staggering decline of 25.56% in net profits to Rs 495 crores in its Q4 results 2022. The company posted a profit of Rs 665 crores for the corresponding quarter last year.

However, the company managed to beat the analysts' estimate of Rs 404.8 crores. The company's revenues grew 7.7% from Rs 3,579 crores last year to Rs 3,855 crores as sales volume rose 3%. On the other hand, the company's operating costs grew 18.5% to Rs 3,135 crores.

“The January-March 2022 quarter was impacted by rising fuel prices, due to which Ebitda during the quarter was lower by 19%. This was partly mitigated by boosting efficiencies under our flagship 'I CAN' program. Supported by the master supply agreement with ACC we further reduced our logistics costs,” said Neeraj Akhoury, CEO of Holcim India and CEO & MD of Ambuja Cements.

The company's EBITDA fell 19% to Rs 790 crores while its EBITDA margin declined to 20.3%.

Ambuja Cements has been in the news recently as Holcim, the world's largest cement maker and the holding company of Ambuja, has put up Ambuja Cements & ACC Ltd., both of the entities' listed companies in India, up for sale. Both companies have a market capitalization of almost Rs 1.2 trillion.

Ambuja is one of the oldest cement brands in India. It was formed in 1983 and has been in existence for the past 39 years. It was acquired by the Holcim Group of Switzerland in 2006 for a consideration of Rs 4,532 crores. The Holcim Group owns 63.19% of Ambuja Cements and 4.48% of ACC. Ambuja Cements holds 50.05% in ACC.

Holcim has been clearing out non-core assets to reduce debt and diversify through acquisitions. Recently, it sold its Brazilian unit for $1 billion and is also in plans to sell its Zimbabwe unit. The sale of its Indian companies would be the exit of Holcim Group after 17 years of operations.

Ambuja has garnered the attention of several big names as the race to acquire the controlling stake in Holcim's Indian cement business is fierce. The Adani Group, led by the world's 5th richest man Gautam Adani, has been holding discussions for the acquisitions. The group is also in discussion with Deutsche Bank, ICICI Bank, and Axis Bank for funding the deal.

Radhakishan Damani, the billionaire investor, promoter in the DMart store chain, and holder of 23% in India Cements Ltd., has expressed interest to invest as a financial partner. Moreover, Sajjan Jindal-led JSW group is reported to have lined up several PE firms and lenders to assure funding of $11 billion for the deal.

The shares of both Ambuja Cements and ACC have rallied up in April amidst rumors of a merger. Ambuja and ACC trade around Rs 380 per share & Rs 2,380 per share respectively.

Article by Aman Agarwal.

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