Switzerland-based Holcim has indicated that the Adani group will be liable for anti-trust fines against Ambuja Cements and ACC. Worth mentioning here is that the Competition Commission of India—the statutory body mandated to regulate anti-competitive activity in the country—had slapped more than Rs 6,700 crore penalty on 11 cement companies, including ACC and Ambuja Cements and others in 2016.
Ambuja and ACC are in a lawsuit with the CCI after the two, along with multiple other cement manufacturers, were found guilty of cartelisation and price-fixing in an investigation by the antitrust regulator in 2016. At present, the case is pending before the Supreme Court.
The CCI had imposed a fine of Rs 1,164 crore on Ambuja and Rs 1,148 crore on ACC.
Speaking at an investor call, Holcim chief executive CEO Jan Jenisch said: “It is a straightforward sale with no further indemnification from our side.”
The world’s largest cement maker Holcim further said the deal with the Adani Group is contingent on the green light from the fair trade regulator. However, it doesn’t see any big obstacle with the CCI as Adani has no prior play in the cement sector.
Further, Holcim said the deal will not attract India’s capital gains tax for its $6. 4 billion transactions to sell stakes in Ambuja Cements and ACC to the Adani Group, and will be able to take the money out of the country without any major issues.
“According to our analysis, it is a tax-free transaction. Never know if any complication arises, but we assume we will get the 6. 4 billion Swiss francs (about $6. 4 billion) as net proceeds,” ET quoted Jenisch as saying.
The business daily said that the income tax department officials are of the view that the transaction was unlikely to face capital gains tax if Holcim had bought the stakes before 2017, when India and Mauritius renegotiated their bilateral tax treaty and withdrew the capital gains tax exemption available to investments from the island nation.
In January 2006, a Mauritius-based investment firm of the Holcim Group acquired Ambuja Cements (then Gujarat Ambuja Cement) for Rs 4,500 crore.
