MUMBAI: The world’s largest cement maker Holcim group, which on Sunday announced the sale of its Indi businesses Ambuja Cements Ltd and ACC Ltd to the Adani group, does not expect any capital gains tax payment to arise out of the 6.4 billion swiss francs it will receive from the sale, said Jan Jenisch, chief executive officer of Holcim, in an analyst call.
“Our analysis comes to the conclusion that there’s no capital tax gain, or any other tax to be paid for this transaction,” said Jenisch.
The sale of Holcim’s India businesses involves the sale of a offshore holding company to another offshore vehicle set up by the Adani group, a transaction similar to Vodafone’s acquisition of Hutch’s telecom operations in India, which had attracted a retrospective tax by the Indian government.
Jenisch added that the deal does not involve any indemnities or warranties from Holcim and that any future liabilities arising out of ongoing litigations will have to be paid by the new owners.
“We have sold the company with no indemnification and no warranties. It’s a straightforward sale of the shares, with no further indemnification from our side,” said Jenisch.
Ambuja and ACC are currently fighting a case in the Supreme Court against a 2016 fine for allegations of cartelisation. The two cement companies, along with nine other cement makers, were found guilty of price cartelisation by the Competition Commission of India, which had imposed a penalty of ₹6,300 crore. Ambuja Cements is liable to pay ₹1,164 crore, while ACC’s liability stands at ₹1,148 crore.
On the choice of Adani as the new owners of Ambuja and ACC, Jenisch said that apart from valuations and credentials of the new owner, smooth execution of the sale process was also an important factor for Holcim in choosing the buyer.
“To make such a transaction you have many dimensions to consider. We talked about valuation, we talked about the new owner, and of course we talked about the smoothness of the execution of such a transaction. And this goes from indemnifications all the way of course to approval process by the Competition Commission of India. So, it is not in our interest here to engage maybe with very competitive companies and then you are hanging in there and you have a very lengthy process. So that was of course another consideration for us. And we are happy that we found a solution where we could get the smoothest possible execution of this agreement,” said Jensich.
“We were thinking if we can get a win-win and win-win means we have a proper, responsible new owner who takes care of our people, takes care of our customers. And then of course, also who pays us the proper value. And that’s what we achieved in the negotiations with the Adani group,” he said.
The Holcim CEO said that the company plans to use the sale proceeds for merger and acquisitions.
“We made it clear that we want to grow the company with this transformation portfolio. So we want to bring solutions and products to 30% of group sales in the very near future. And in order to do that, we also need to shift the portfolio; we need to divest to raise money to invest through acquisitions. In the last 50 months alone we spent over 5 billion Swiss francs. When I look at our M&A pipeline, this is quite well filled, I think at the moment we are working on around 10 transactions, from the usual bolt on acquisitions, for aggregates and ready mix concrete, but also to some exciting projects for solutions and products,” said Janisch.
Holcim also added that the sale of the Indian businesses will help it reduce its overall carbon emissions.
“We have around one quarter of our total carbon dioxide emission in India. So we reduce our carbon footprint quite significantly,” said Janisch.