The Associated Cement Companies (ACC) is increasingly coming under shareholder pressure to consider a possible merger with Gujarat Ambuja Cements Ltd (GACL). GACL, which holds almost the 15 per cent mark in ACC, has however always maintained that it is a strategic investor in the company and has no immediate plans to make an open offer. Responding to minority shareholders’ queries on a possible merger with GACL, ACC chairman Tarun Das said at the company’s AGM on Friday: "We have never discussed the merger issue at the board level. However, in deference to shareholder wishes, I will take it to the board for discussion and report back." Minority shareholders have, since the GACL takeover, been demanding that GACL make an open offer for ACC. GACL acquired the 14.45 stake in ACC from the Tatas in three tranches at Rs 370 per share.
The recent acquisition of management control in UltraTech CemCo by Grasim, which makes it the biggest cement company in the country was also mentioned by the shareholders, who felt that the merger was necessary to compete effectively. The ACC-GACL issue had snowballed into a major controversy when the Securities Appellate Tribunal (SAT), in an order in October, 2002 directed SEBI to properly investigate the issue as to whether Ambujas acquired control over ACC as a result of acquisition of shares held by Tata group companies. Sebi subsequently said that GACL did not violate the takeover code when it acquired a 14.45 per cent stake in ACC Ltd from the Tata group. Mr Das said that ACC was looking at a sales growth of around 7-8 per cent during the current fiscal. It has a capex plan of around Rs 500 crore for the fiscal which will be primarily spent on the modernisation of the Chaibasa Works and setting up of power plants.