Transaction tax

Don’t expect capital gains tax on the sale of Ambuja, Acc: Holcim Ceo

MUMBAI: Holcim Group, the world’s largest cement maker, which on Sunday announced the sale of its Indian operations Ambuja Cements Ltd and ACC Ltd to Adani Group, does not expect a tax payment on the most -values ​​stems from the 6.4 billion Swiss francs it will receive from the sale, Holcim chief executive Jan Jenisch said on a call with analysts.

“Our analysis concludes that there is no capital tax gain, or any other tax liability, for this transaction,” Jenisch said.

The sale of Holcim’s Indian operations involves the sale of an offshore holding company to another offshore vehicle set up by the Adani Group, a transaction similar to Vodafone’s acquisition of Hutch’s telecommunications operations in India, which attracted a retroactive tax by the Indian government.

Jenisch added that the agreement does not imply any indemnity or warranty from Holcim and that any future liability arising from ongoing litigation will have to be paid by the new owners.

“We sold the business without compensation or warranty. This is a simple sale of the shares, with no further compensation from us,” Jenisch said.

Ambuja and ACC are currently fighting in the Supreme Court against a 2016 fine over cartel allegations. The two cement plants, along with nine other cement manufacturers, were found guilty of price cartelization by the Indian Competition Commission, which imposed a penalty of 6,300 crores. Ambuja Cements is required to pay 1,164 crore, while ACC liability stands at 1,148 crore.

Regarding the choice of Adani as the new owners of Ambuja and ACC, Jenisch said that in addition to the appraisals and references of the new owner, the smooth running of the sales process was also an important factor for Holcim in the buyer’s choice.

“To make such a transaction, you have to take into account many dimensions. We talked about valuation, we talked about the new owner and, of course, we talked about the smoothness of executing such a transaction. And it goes from compensation all the way to the approval process by the Competition Commission of India. So it’s not in our interest here to maybe engage with very competitive companies, and then you hang in there and have a very long process. So that was of course another consideration for us. And we are happy to have found a solution to obtain the best possible execution of this agreement,” said Jensich.

“We thought if we could get a win-win and a win-win, that means we have a proper and responsible new owner who takes care of our employees, takes care of our customers. And then of course, who pays us fair value. And that’s what we got in the negotiations with the Adani Group,” he said.

Holcim’s CEO said the company plans to use the proceeds from the sale for mergers and acquisitions.

“We have made it clear that we want to grow the business with this transformation portfolio. So we want to bring solutions and products to 30% of group sales in the very near future. And to do that, we also need to change portfolio; we have to divest to raise funds to invest through acquisitions. In the last 50 months alone, we’ve spent over 5 billion Swiss francs. When I look at our M&A pipeline, it’s pretty full, I think we’re working on about ten deals right now, from the usual acquisitions, for aggregates and ready-mixed concrete, but also some exciting projects for solutions and products,” Janisch said.

Holcim also added that selling the Indian businesses would help it reduce its overall carbon emissions.

“We have about a quarter of our total carbon dioxide emissions in India, so we’re reducing our carbon footprint quite significantly,” Janisch said.

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