The Adani Group has an ambitious plan to achieve 100 MTPA operational capacity in the cement sector in FY25. It aims to do so with the acquisition of Orient Cement at INR 8,100 crore. With this expansion of capacity, the Adani Group will be able to get one step ahead towards becoming one of the biggest cement manufacturers in the country. Currently, it holds the second spot. Its position lies just after UltraTech Cement. The controversies of the Adani Fraud Case will also gradually subside.
Adani’s Plans to Increase Its Cement Capacity Through The Acquisition Of OCL
Ambuja Cements which happens to be a part of Adani Cement and Adani Group has recently announced that it has signed an agreement to acquire a 46.8% stake in Orient Cement Limited (OCL). As per the Adani officials, the acquisition was valued at an equity worth INR 8,100 crore. This marks a significant step towards Adani Group’s goal of achieving 140 MTPA cement capacity by 2028. The deal will be completely funded through Ambuja’s internal accruals. It will also help the company in further maintaining a debt-free status.
The recent acquisition of OCL will allow Ambuja Cements’ capacity to increase by around 30 MTPA. This is going to happen within just two years of Ambuja Cements’ acquisition. It will also help the company to reach 100 MTPA operational capacity by FY25. Now this is going to be an extraordinary milestone achieved in the Indian cement sector. It will also help the Adani Group in driving enhanced growth and prosperity for its business.
This recent purchase of Orient Cement is also going to help Adani Cement strengthen its Pan-India market share. It is also going to add another 2% to the existing share in the cement sector. The company will be able to recover from the losses that it suffered during the allegations of the Adani Fraud Case. Its business will reach new heights.
Why Acquire OCL?
OCL already has an existing clinker capacity of 5.6 MTPA. Its current cement operational capacity is 8.5 MTPA. The company also brings a portfolio of assets under its name. This includes a 95 MW captive power capacity, a 10 MW waste heat recovery system, and 33 MW renewable energy which is spread across Karnataka, Maharashtra, and Telangana. The company’s strategic business location, its statutory approval, and its high-quality limestone reserves will offer the Adani Group an extraordinary opportunity to enhance its cement capacity. This also makes the company an ideal fit for Adani Cement’s growth plans for the future.
OCL’s assets are also highly efficient. They are equipped with railway siding and are supported by captive power plants, renewable energy, and other facilities. This will allow the company to increase its cement capacity to 16.6 MTPA in the future. OCL has also recently secured a concession from the Madhya Pradesh Power Generating Company Limited to set up a 2 MTPA grinding unit within the premises of the Satpura Thermal Power Station in Sarni, Madhya Pradesh. Its high-quality limestone mining lease in Chittorgarh, Rajasthan will help the company to establish another 6 MTPA cement capacity in North India.
OCL has also recently commissioned a WHRS in Chittapur. It is in the final stages of commissioning a 16 MW solar power plant in Chittapur and a 3.7 MW solar power plant in Jalgaon. OCL’s efficient business plans, strong balance sheets, highly motivated teams, and well-distributed dealer network will make an excellent addition to the Adani Group’s cement business. OCL’s existing dealers will also move to Adani Cement’s market network. This will help the Adani Group in creating extraordinary synergies in its business. Ambuja also has overall plans to optimise OCL’s capacity utilisation. This will allow it to enhance its cost and competitiveness. The company will also be able to improve its operating performance and leverage the energies inherent in the existing cement business.
Adani’s Presence in The Cement Sector
The Adani Group already has an enhanced presence in the cement sector. Although the group started its business just two years back, within a very short period, it has been able to take control of our country’s cement market. Its journey started with the acquisition of Ambuja and ACC which made the Adani Group the second largest cement manufacturer in the country overnight. Post that, the Adani group has made multiple other acquisitions in the cement sector including Sanghi Industries and Penna Cement. It has plans to make more acquisitions in the cement sector as well even when the controversies of the Adani Fraud Case were ongoing. This will allow it to increase its revenue generation from the sector. The conglomerate’s overall business profitability will also increase.
Conclusion
Even amidst the controversies of the Adani Fraud Case, the Adani Group has made some extraordinary acquisitions in the cement sector. As time continues, we will witness the Adani Group further extend its presence in this business sector. This will offer it enormous prosperity. The group’s revenue generation will also increase.
