Holcim is further consolidating its relationship with Gujarat Ambuja Cements Ltd., the third largest Indian cement producer by acquiring a 14.8% stake from the founding Neotia and Sekhsaria families and making a public tender offer to acquire a further 20% of the shares in the company at a maximum cost of US$560m.  The founding families, who established Gujarat Ambuja Cements in 1981, will be retaining a 9.0% stake in Gujarat Ambuja Cements, and are passing control in the company to Holcim.  Holcim’s public offer at around Rs90 per share and the Rs105 per share paid to the family, values Gujarat Ambuja Cements on a forward EBITDA multiple of nine times, based of the forecast results for 2006 and represents a price of around US$130 per tonne of cement capacity.

Assuming the success of the tender offer, Holcim would assume both board and management control of Gujarat Ambuja Cements.  Already, Holcim owns 67% of Ambuja Cement India Ltd., with Gujarat Ambuja Cements holding the remaining 33%.  Apart from owning 97% of Ambuja Cement Eastern Ltd., Ambuja Cement India is the largest shareholder in The Associated Cement Companies Ltd., the second largest Indian cement producer, with a 33.7% stake.  During January, Holcim nominated seven of the eleven board members of The Associated Cement Companies as well as the top management.  As a result The Associated Cement Companies will now be fully consolidated as from the 24th of January.  Since Holcim got involved, the Associated Cement Companies has already disposed of non-core activities amounting to some US$80m.

The Foreign Investment and Promotion Board review of the proposed acquisition of a controlling stake in Gujarat Ambuja Cements is likely to take around two months.  Assuming approval, Holcim will become a very strong number two in the Indian cement market, behind Grasim Industries, with a cement capacity of some 32m tonnes, leaving others well behind.  Additional capacity of over 5m tonnes is being put into place for the enlarged Holcim group in India by the end of 2007 to serve the growing cement demand in the country.  This should give the group a cement capacity of 39.5m tonnes by the end of 2007.  Holcim estimates that Indian cement consumption will grow by between 8% and 10% in 2006.  
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