Financial Daily from THE HINDU group of publications
Friday, Jan 21, 2005
Financial Daily from THE HINDU group of publications Friday, Jan 21, 2005 |
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Corporate
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Interview Holcim's expertise at GACL disposal virtually free: Singhvi Our Bureau
Mr Anil Singhvi, whole-time Director, Gujarat Ambuja Cements
Mumbai , Jan. 20 FOLLOWING the announcement of an alliance between Gujarat Ambuja Cement Ltd (GACL) and Swiss cement major Holcim Ltd that will see Holcim get 67 per cent stake in Ambuja Cements India Ltd (ACIL), Business Line caught up with Mr Anil Singhvi, a whole-time director at GACL. Excerpts from the interview. How do you view the pay-off from the investment in ACC five years ago? There is no question of pay-off since we have not relinquished any interest or involvement in ACC. Why did you decide on this arrangement with Holcim? Why did you rope in an MNC instead of consolidating the hold on ACC on your own? We had three options: The private equity investors had the put option, and we could have acquired 100 per cent ownership of ACIL (Ambuja Cement India Ltd). That would have cost us more than Rs 800 crore and that's a lot in funds. To further acquire into ACC would have required even more funds. The second option was to find another set of private equity investors but eventually that would bring us to the same situation again. The third and best option we had was to bring in a strategic investor who had the capital as well as the expertise, which is what we did. What is beneficial in this entire scheme for Gujarat Ambuja shareholders? GACL and Holcim have entered into a strategic alliance for business co-operation, not just financial collaboration. The fundamental thing is this partnership. The financial collaboration is a fallout. Just getting capital would not have helped, we want their expertise too. GACL will now have access to their entire business practices and processes, the use of information technology, the use of waste material, the use of alternative fuels, sourcing of fuel (Holcim has access to coalmines in Indonesia through a subsidiary), various new applications of cement, and so on. One must also remember that with ACIL increasing its stake in ACC to 50 per cent, GACL's effective stake in ACC goes up from 8.5 per cent to 17 per cent without GACL spending a single penny towards this, without subscribing to any additional capital. The expertise of Holcim is also available to us without the involvement of a single rupee. Is there a possibility that Holcim could go ahead and acquire 100 per cent of ACC later? What about the possibility that Holcim could acquire 100 per cent in Ambuja Cement itself? We have a clause in our agreement that any investment in India by Holcim will only be through Ambuja Cement India. So whichever unit Holcim wants to acquire can only be made in consultation with us. About Ambuja Cement India itself, we have a put-call option. Gujarat Ambuja can put its shares and Holcim can call the shares. Whether it is possible that they acquire 100 per cent in ACIL, well ... life is full of possibilities. Would there be changes in the management of ACC? Holcim is one international company that believes that cement companies must be run by the local people themselves. There will be no change in the management of ACC. Why has the market reacted negatively with respect to Gujarat Ambuja and ACC? The market buys on rumour and sells on news.
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