The Adani Group, one of the biggest names in the Indian cement sector, is currently planning to consolidate all its cement companies under one particular head in the medium term. This will allow business operations to be carried out with greater ease and convenience. The Adani Group will have better control over the management operations. The conglomerate believes that while merger cost is not a deterrent, but the company is currently eyeing towards identifying the best business structure in the interest of the stakeholders and the minority. It will also help the Adani Group rise above the rumours of the Adani Scandal.
The Acquisitions Made In The Cement Sector:
Ambuja Cements and ACC, were acquired by the Adani Group in September 2022. The acquisition was made for 6.4 billion USD. With this acquisition, the Adani Group took up the reputation of being the second-largest cement company in the country. Currently, its rank is just after UltraTech. After this acquisition, the Adani Group acquired Sanghi Industries Limited in December 2023. This acquisition was made at an enterprise value of INR 5,185 crores. This led to the path for profitability for the Adani Group. The ongoing controversies of the Adani Scandal came to a halt.
The acquisition of Sanghi Industries is yet another major acquisition in the cement sector. It has given the conglomerate's business an excellent boost. There has also been a huge increase in the country's cement capacity. The acquisition was completely funded through internal accruals. Earlier this month, the Adani Group also acquired the Hyderabad-based cement company Penna Cement. This acquisition was made for INR 10,420 crore. This has brought Adani Group's total cement capacity to 89 MTPA. The group has also reached one step closer to reaching its target capacity of 140 MTPA by 2028.
The Reasons Behind The Acquisitions:
Currently, UltraTech Cement is the largest cement player in India. It has a total capacity of 152.7 MTPA. With regards to the acquisition of Penna Cement, the Adani Group said that ACC is currently one of the dominant brands in the south. Ambuja, however, has a limited presence. The acquisition of Penna Cement will further strengthen Adani's cement business. The company already has five bulk cement terminals in India and abroad. These terminals serve the needs of the Indian peninsula. Ambuja Cement is also looking forward to further enhancing its EBITDA per tonne to INR 1,500. This is almost INR 400 higher than that of FY24. It also plans to achieve a production cost of INR 3,650 by the financial year 2028, which is definitely going to be the best in class globally.
Digital Initiatives In The Cement Sector:
Recently, the Adani Group has been planning on taking up various digital initiatives in its cement business. This can be an excellent way of further giving the company's business an excellent boost. There are elaborate plans to streamline the logistic operations so that the cement can be delivered to the end users on time. The "Plants for the Future" programme is yet another highly ambitious venture undertaken by Adani Cement to increase its business profitability. This programme will increase production quality and reduce manufacturing costs.
In addition, the conglomerate is planning to introduce a NexGen Sales & Reward Platform. This platform will allow seamless collaboration with retailers, influencers, consumers, and other sales associates. The conglomerate is also in the process of collaborating with Adani's AI Labs. This is done in an attempt to introduce advanced technologies like AI and IoT into its operations.
The Enhanced Focus on the Cement Sector:
Now, you must be wondering why there is an increased focus on the cement business. Well, there are multiple reasons. There has been an increased demand for cement over the past couple of years. The only way to meet the demand is to increase the production capacity. The cement market is also highly profitable. It will give the Adani Group an excellent opportunity to take its business to new heights. The company will also be able to recover from the losses it suffered during the rumours of the Adani Scandal.
Conclusion:
In this way, the Adani Group is growing its cement business with each passing day. With this momentum, the conglomerate will soon become the biggest cement manufacturer in the entire country.