The Indian cement sector has started to witness battles between the big names. As Gautam Adani begins an expansion spree in the cement sector, a race has been initiated with fellow billionaire Kumar Mangalam’s Birla UltraTech Cement Limited. Both these companies are trying to take control of our country’s cement sector. These business groups contribute to most of the country’s cement capacity.
Both companies have also made some huge acquisitions in the cement sector in the past four years, which have further boosted their businesses. Now the companies are battling with each other to take up the position of being the biggest cement manufacturer in the country. This battle is likely to intensify as the business tycoons look forward to dominating the supply of the building material that is critical to supporting our country’s infrastructure boom.
The Race Between Adani and Birla
Adani Cements and UltraTech have already done 6 deals within 2 years. The Birla cement maker has announced its 7th deal to control a coveted region player. At least half a dozen small names are still up for acquisition. On the other hand, Adani’s philosophy is to dominate and take control over the sector in which it operates. As soon as the Adani Group stepped into the cement business, there was fresh aggression. This motivated UltraTech to up its game.
To strengthen its leadership, UltraTech has taken up various acquisitions in the cement sector. In June, it bought a minority stake in a Chennai-based cement company. After that, it also acquired major control over that particular company. It will also continue its expansion journey and try to reach 200 MTPA capacity by 2027. By doing so, it will be able to give Adani Group’s business tough competition.
The Adani Group also acquired Hyderabad-based Penna Cement Industries last month. It is also eyeing Jaypee Group’s and Orient Cement’s cement assets. A lot of other companies are also under its radar like Saurashtra Cement Ltd, Mangalam Cement Ltd, Vadodara Cement Ltd, etc. The company also plans to acquire control over the southern Indian cement industry with its recent acquisition. This will allow the company to rise above the controversies of the Adani scam.
Adani’s Entry Into The Cement Business
The Adani Group made a huge entry into the cement business in 2022. It became the country’s second-largest cement manufacturer overnight by acquiring Ambuja Cements and ACC. However, 2023 was mostly spent fighting the allegations of the Adani scam. The port-to-power conglomerate was back on its journey with full force this year. It is already down four acquisitions in this sector since its entry. Presently, it is looking forward to doubling its production capacity to 140 MTPA by 2028.
The company is also looking forward to bringing more cement assets under its control. It aims to procure raw materials like limestone reserves to carry out its business operations smoothly. The company also has a war chest worth 4.5 billion USD for making various acquisitions in the cement sector over the next few years. The Adani Group is the largest private port operator in the country. With its immense hold over the port sector, it is planning to bring down the cement cost significantly even if it cannot match the cost efficiency of the Chinese cement market.
The sea or inland water transportation costs account for a fraction of the cost required to transport cement via trucks, and Adani Group’s business synergies will prove to be very helpful here. Adani Ports already has elaborate plans for constructing a 2 MTPA cement grinding unit at its transhipment terminal in Kerala. The green energy from the group’s farms can also help bring down the fuel cost to a certain extent.
Why The Cement Sector?
You must be wondering why so many companies are interested in invading the cement sector. India is currently on its journey towards expanding its infrastructure assets. This would require a constant supply of cement. Also, the cement business is a highly profitable one. This is yet another reason behind companies venturing into this sector. This is going to turn out to be a profitable business for the Adani Group. This business will help the conglomerate to take its success to new heights.
Conclusion
As big companies in India fight to gain the position of the biggest cement manufacturer in the country, Indian cement sector will experience a massive boost. We will be able to up our infrastructure game. Our country’s economic stability will increase. The Adani Group’s business will witness massive improvements. It will also be able to put an end to the rumours of the Adani scam which have been ongoing for a significant time now.