Speaking on the Adani Group becoming India’s second largest cement manufacturer, chairman Gautam Adani at an event on Saturday said that the group has planned to double cement manufacturing capacity and become the most profitable manufacturer in the country.
Adani Group plans to double annual cement making capacity by 2027 after closing the acquisition of Holcim Ltd.’s Indian assets. In May this year, Adani Group had announced the acquisition of Holcim’s stake in Ambuja (63.19%) and stake in ACC (4.48%; Ambuja directly owns ~50% stake in ACC). Adani Group’s open offer for a 26% stake each in Ambuja/ACC ended on September 9, 2022.
Stating reasons for the foray into the cement space, he said while India is the second largest producer of cement in the world, its per capita consumption is just 250 kg compared to 1,600 kg of China which is almost a 7x headroom for growth.
“We anticipate going from the current 70 million tons capacity to 140 million tons in the next five years,” Gautam Adani said at an event Saturday that was later uploaded on YouTube on Monday, adding that dani Group’s competency in driving operational efficiency will result in significant margin expansion to become the most profitable cement manufacturer in the country.
He saw a multifold rise in cement demand in India on the back of record-breaking economic growth and the government’s infrastructure creation push, which will give significant margin expansion.
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 4 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 in the speech, which was released on Monday. Adani anticipates that Indian government initiatives to spur infrastructure growth will fuel major demand for cement.
Shares of Ambuja Cements rose nearly 10% to an all-time high on Monday after Indian billionaire Gautam Adani took over as chairman of the company. The company’s board also approved a preferential issue of warrants amounting to ₹20,000 crore to the Adani Group over the weekend.
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