Sweden-based cement maker Holcim has announced its plan to restructure Indian operations by increasing the company's stake in Ambuja Cements Ltd.
The cost-cutting move was decided as Indian cement companies continued experiencing a decline in demand as a result of decreasing infrastructure and home building projects.
The terms of the deal requires Ambuja to pay INR 35 billion for a 24% stake in Holcim's local holding company, Holcim India. The purchase will prompt the merging of Holcim India into Ambuja through a share exchange.
The deal would improve the existing coordination between Ambuja Cements and fellow cement maker ACC, Holcim reported on Wednesday.
The reorganisation was also expected to increase cost savings by US $150 million per year, which would be divided between the two Indian cement companies.
"The desire is to extract synergies from both companies, to cooperate more in the logistics area," said Ambuja Cements Managing Director, Onne Van Der Weijde in an interview, adding, "we are going through somewhat rougher patch than we have been in the last few years and this is one of the ways we can offset that lack of profitability and the profitability growth."
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