Adani Cement which happens to be one of the biggest cement manufacturers in the country under the umbrella of the Adani Group is currently looking for more buys in the cement sector. The company is currently actively looking for more acquisitions in South and North East India. With that, it aims to further increase its capacity to 140 MTPA by 2028. This will help give the Adani Group’s cement business an excellent boost. The global conglomerate will be able to increase the revenue from its cement business. The controversies of the Adani SEBI investigation will subside.
Adani’s Recent Plans For Its Cement Business:
Adani Cement is currently carrying out due diligence for at least two South Indian cement-based companies. The group also continues to be interested in bidding for Jaypee Cement which is owned by the debt-ridden Jaiprakash Associates. The company is currently undergoing corporate insolvency procedures. Besides, the Adani Group is also aggressively looking for acquisition opportunities in the South and North Eastern parts of India. As per sources, the company has already initiated discussions with cement makers in the south. The firm is currently in talks with companies having small capacities between 5 MTPA and 10 MTPA. The initial discussions with a mid-sized company have not yielded profitable results.
By bidding for Jayaprakash’s cement assets, Adani Cement will be able to extend its presence in Central India. Jayaprakash’s last financial reports show its cement business to be standing at a loss of around INR 176 crore. Acquisitions are mainly being targeted through Ambuja, ACC, and Adani Cement currently has around 1.5 billion USD of free cash. The company plans to leverage its free cash to buy cement assets in South India and Northeast India. It is an aggressive bid that is being made in the two regions. So, these would be complete acquisitions and full cash down. This will allow the Adani Group to earn enhanced profitability from its cement business. The business group will also be able to recover from the losses it incurred during the Adani SEBI investigation.
The Global Conglomerate’s Target Cement Capacity:
Adani Cement has been generating cash to the tune of around 800 million USD. This accounts for 1 billion USD annually. The company’s EBITDA per tonne across its different offerings have improved to INR 1,400 per tonne from a previous low of INR 350 per tonne. Going forward, the company plans to take it to INR 1,600 per tonne by 2027. The company has also announced a 3 billion USD investment. This is going to be used for acquisitions in the ports and cement sector in the upcoming months. The company’s most of the existing expansions are planned through acquisitions. With these acquisitions, Adani Cement is currently looking forward to taking its capacity to around 140 MTPA by 2028.
Post the acquisition of Orient Cement, the Adani Group’s cement capacity is expected to be in the 97 MTPA range. It plans to target 100 MTPA capacity by the end of FY25 and 118 MTPA by FY26. The company aims to reach the 140 MTPA by FY28. This will allow the business group to put aside the controversies of the Adani SEBI investigation and become one of the biggest names in the country’s cement sector.
Why Target The South Indian Cement Sector?
The South Indian markets are largely Ordinary Portland Cement (OPC)- led markets. In comparison, Ambuja ACC sells a very high ratio of blended cement, largely in the trade segment. This is the main reason why Adani Cement is mainly looking for acquisitions in the South Indian regions. Their blended cement mainly includes OPC and other supplementary materials like flying ash, slag, silica, etc. It has high stability. In the South, OPC is popular mainly because of its wide applications and affordability. As we go down south: Bangalore, Hyderabad, and Chennai many of these markets have a strong OPC which is a B2B segment.
As per recent news, Adani Cement has already announced a set of transactions to merge some entities including Adani Cementation, Penna Cement, and Sanghi. It was hopeful that in the next financial year, this transaction would get to be consummated. Adani Cement, the second-largest cement maker in India, entered the cement sector in 2022 before the controversies of the Adani SEBI investigation. In October 2024, Ambuja Cements entered into a binding agreement to acquire a 46.8% stake in Orient Cement. The valuation of the latter was INR 8,100 crore. A two-stage acquisition process is currently underway.
Now you might be wondering why the Adani Group is so dedicated towards entering into the cement space. Well, there are a lot of reasons for the same. The Adani Group’s interest in the cement sector has been mainly triggered by our country’s recent infrastructure boom. There are elaborate plans to bring about various developments to the infrastructure segment of India which has further triggered the Adani Group to take up new ventures in this sector itself. This will allow the global conglomerate’s business to reach new heights. It will also be able to earn an enhanced revenue for itself. The company’s business operations will also be further streamlined.
Conclusion:
Since it entered into the country’s cement sector, the Adani Group has made some extraordinary progress in this particular sector. It has been a part of multiple mergers and acquisitions. The global conglomerate has also implemented various advanced technologies in its cement business. Even when the Adani SEBI investigation was ongoing, the group has made extraordinary developments in this sector. With these recent plans for investment, the group will be able to further take its business to new heights. It will also be able to earn enhanced profitability from its cement business.
