Adani Group Aims To Be India's Largest Cement Manufacturer With $3 Billion Acquisition: Report Adani Group is eyeing a potential $3 billion cement acquisition in lieu of recent boom in the infrastructure sector by the government.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Adani Group is exploring several potential acquisitions in the cement sector, including Hyderabad-based Penna Cement, Saurashtra Cement of Gujarat, Jaiprakash Associates' cement business, and Vadraj Cement owned by ABG Shipyard. The group is keeping aside a generous amount of $3 billion for these acquisitions to position itself to be India's largest cement manufacturer, reports The Economic Times.
In a bold bid to dominate the cement industry, Adani Group is executing a series of strategic acquisitions, aiming to outpace UltraTech Cement of the Aditya Birla Group and emerge as the leading cement producer in the next three to four years. The Indian cement sector is buoyed by the government's unprecedented infrastructure spending, anticipating a demand spike. Penna Cement's valuation is projected to hit INR 9,000 crore, with its capacity expansion from 10 to 15.5 million tonnes per annum (MTPA) potentially driving up its worth.
Saurashtra Cement, valued at INR 1,487 crore, is scouting for acquisition opportunities. Dalmia Bharat's acquisition of Jaiprakash Associates' cement and power assets for INR 5,666 crore has been stalled by shareholder disagreements since April 2022.
The group is prepared to invest $85-120 per ton in acquiring mid-tier cement companies, especially those with expansion potential, limestone mine access, and packing facilities. This strategy was evident when the Adani Group acquired Sanghi Cement at $100 per ton, a company with a 6.1 MTPA capacity.
Penna Cement boasts a 2.8 MTPA packing terminal. Saurashtra Cement and Jaiprakash Associates have capacities of nearly 5 MTPA and 9.5 MTPA, respectively, while Vadraj Cement has a 6 MTPA capacity. Both Jaiprakash Associates and Vadraj Cement are navigating bankruptcy proceedings. ICICI Bank's insolvency plea against Jaiprakash Associates has been paused by the National Company Law Appellate Tribunal (NCLAT), which has recommended that ICICI Bank consider a settlement offer from the firm.
Ambuja Cement, with a cash reserve of INR 24,338 crore and zero debt, is the Group's prime acquisition in this sector. Adani has 63.15 per cent stake in Ambuja Cements Ltd. and 56.69 per cent stake in ACC Ltd (Of which 50 per cent is held through Ambuja Cements). The Group may pivot to ACC for its strategic fit in South India, where the Group seeks to strengthen its footprint.
