In order to catch up to market leader UltraTech Cement, the Adani Group, the new owner of Ambuja Cements and its subsidiary ACC, plans to increase the two companies combined annual cement production capacity to 140 million tonnes by 2030.
After completing the acquisition on Friday, Gautam Adani, the chairman of the Adani Group, stated in a speech on Monday that the company expected to increase its capacity from the present 70 million tonnes to 140 million tonnes over the course of the next five years. He says that the proximity of these two industries is good for the cement business of the port-to-renewable-energy conglomerate.
Ambuja Cements will get 20,000 crores from the Adani Group via a preferred share allocation. The funds aim to “further improve” Ambuja’s financial sheet and provide the resources needed for business expansion, acquisitions, and technological advances. The financial injection and the idea of acquisitions led to talk of more consolidation in the cement business.
As potential targets, a Gujarat-based company with interests in the eastern portions of the nation and a cement manufacturer with manufacturing facilities in Tamil Nadu and Andhra Pradesh have both been mentioned. While the Adani Group has lofty goals, UltraTech Cement, a member of the Aditya Birla Group, also intends to dramatically boost its capacity to almost 160 million tonnes annually by 2030, from roughly 120 million tonnes at present.
Adani claimed that the growth potential of India and the opportunity for increased consumption were the reasons he decided to invest in the cement industry. He said that India is the second-largest cement producer in the world but only uses 250 kg of cement per person, while China uses 1,600 kg per person.
Cement Demand
The many infrastructure and growth initiatives launched by New Delhi will help cement demand increase on average by 1.2 to 1.5 times GDP over the long run, he predicted. “We expect growth at the twice this rate.” The richest person in India said that the group’s knowledge of how to make operations more efficient would also help the new cement sector.
We anticipate a large margin expansion and, as a result, becoming the most lucrative cement company in the nation, he added. On the basis of four factors—demography, the world’s largest middle class; the global push for sustainability; and digitization—the head of the Adani Group was also optimistic about India’s growth prospects.
“India’s youth and expansion of our middle class will work together to accelerate our country’s digital transformation and open up new opportunities,” he declared. In my opinion, the unrivaled digital environment that India is building will provide a big boost in addition to our projected 8% GDP growth. Our progress toward achieving a $30 trillion GDP target by 2050 will be accelerated. “
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