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Guj. Ambuja acquires balance 7.2% in ACC - Views on News from Equitymaster
 
 
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  • Jan 15, 2000

    Guj. Ambuja acquires balance 7.2% in ACC

    According to newspaper reports, Gujarat Ambuja Cements Limited (GACL) has acquired another 7.2% stake in Associated Cement Companies (ACC) from the Tata Group. The stake has been acquired at earlier rate Rs 370 per share. After this, the cost of acquisition of the 14.4% stake stands at Rs 9.1 bn.

    GACL is the largest manufacturer of cement in Gujarat and Punjab. It is India's most efficient cement manufacturer due to high degree of mechanisation in its products and mining activities. It has controlled freight costs by moving bulk of its production through the sea route.

    GACL's recent acquisition spree, first DLF Cement and then ACC, has put pressure on the cash flows of the company. Added to this are the company's internal expansion plans. In view of this, the company is accessing the ADR/GDR market for raising US$ 200 m.

    The company's acquisition spree has been motivated by the bright prospects of the cement sector in the coming years. Then there is also a fear of the international players stepping up their presence in India. In this regard, having a larger capacity base will help the company in withstanding competition.

    In the near term, however the company's bottomline could come under pressure due to a surge in borrowings to finance these acquisitions.

     

     

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