Adani to double cement making capacity to 140 m tonne in 5 years | The Financial Express

Adani to double cement making capacity to 140 m tonne in 5 years

Adani Group has completed its $6.5-billion acquisition of Swiss major Holcim’s India assets

Adani to double cement making capacity to 140 m tonne in 5 years
Adani Group chairman Gautam Adani said he saw a multi-fold rise in cement demand in the country on the back of record-breaking economic growth and the government's infrastructure creation push, which will give significant margin expansion. (Reuters file photo)

Adani Group, which last week completed its $6.5-billion acquisition of Swiss major Holcim’s India assets – Ambuja Cements and ACC, plans to double its cement manufacturing capacity to 140 million tonne in the next five years and emerge as the most profitable manufacturer in the country.

In a speech made at an event to mark the completion of the acquisition on September 17, which was released to the media on Monday, Adani Group chairman Gautam Adani said he saw a multifold rise in cement demand in the country on the back of record-breaking economic growth and the government’s infrastructure creation push, which will give significant margin expansion.

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“While India is the second-largest producer of cement in the world, our per capita consumption is just 250 kg compared with 1,600 kg of China. This is almost a 7x headroom for growth. Furthermore, as several of the government’s programmes gather momentum, the long-term average growth in cement demand is expected to be 1.2 to 1.5 times the GDP. We anticipate growing at twice this number,” Adani said.

Calling the acquisition ‘historic’, he said this buyout is India’s largest ever inbound M&A transaction in the infrastructure and materials space and closed in a record time of four months. “Our entry into this business is happening at a time when India is on the cusp of one of the greatest economic surges seen in the modern world,” he said.

Given the strong growth expected in India’s economy with investments planned in infrastructure and housing, Adani said he sees a sustained and strong demand for cement in the next several years, enabling it to go after ‘significant margin expansion’ in the business.

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With the acquisition of Ambuja and ACC Cement, Adani Group has emerged as the second-largest cement maker in the country with an installed production capacity of 70 million tonne per annum. The group now controls close to 14% of the country’s cement market. The country’s largest cement maker, UltraTech, controlled by the Aditya Birla Group, has a capacity of 115 million tonne per annum and a market share of 25%. UltraTech has outlined a plan to raise its capacity to 200 million tonne by 2030.

On Monday, shares of Ambuja Cement closed up 9.42% on the BSE at Rs 564.95, while ACC closed up 1.08% at Rs 2,643. The Adani Group has the world’s largest solar power company, while it is the country’s largest airport operator with 25% of passenger traffic and 40% air cargo. It also controls India’s largest ports and logistics company with a 30% market share. The group is also India’s largest integrated energy player spanning generation, transmission, distribution, LNG, LPG, city gas and piped gas distribution.

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