By John Revill and Saurabh Chaturvedi
ZURICH--Swiss cement maker Holcim Ltd (HOLN.VX) Wednesday said
it was reorganizing its Indian operations to offset sluggish growth
in the country's building sector, a move that will generate savings
of up to $150 million a year.
Under the deal, Holcim will give up the 50.01% it holds in ACC
Ltd. (500410.BY) to Ambuja Cements Ltd. (500425.BY). In return, the
Zurich-based company will increase its stake in the latter company
to 61.39% from 50.55% and receive $600 million in cash from
Ambuja.
India is Holcim's biggest market, making up around a third of
its total sales.
Sales growth there was below expectations last year as the
market faced a slow restart after the monsoon, while slower
economic development has also taken its toll.
Holcim entered into partnership with Ambuja Cement in 2005 to
acquire a majority stake in ACC and a year later acquired a
majority in Ambuja Cement.
ACC and Ambuja will continue to operate as separate brands in
India, with separate management and routes to market, Ambuja
said.
Annual savings of around $150 million will come from shared
logistics and supply chains, as well as reducing fixed costs by
sharing functions like human resources and IT, the company
added.
A slowdown in the Indian market prompted the move, a company
executive said.
"In these times, we need every possible cost saving we can
achieve," Onne Van Der Weijde, managing director of Ambuja Cements
told a conference call with reporters. "If you cannot get external
growth, then you look internally."
In the first three months of this year, ACC and Ambuja Cements
sold less cement, particularly in the northern and southwestern
parts of the country, Holcim said in April, with cement and clinker
volumes 3.7% lower compared with the year earlier.
Write to John Revill at john.revill@wsj.com
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