The cement manufacturing unit of the Adani Group, Ambuja Cements, is currently in talks with Star Cement as a part of its expansion strategy. The details of the transaction are yet to be finalized. However, the group is said to have appointed a consulting firm, EY, to evaluate the deal between the two companies. Now this is going to become another huge acquisition for the Adani Group in the cement manufacturing sector. It will allow the group to further establish its presence in the sector. The Adani Group will also be able to earn itself the reputation of being one of the biggest cement manufacturers in the country. The allegations of the Adani Case will subside.
Adani’s Aim To Acquire Star Cement:
Ambuja Cements is currently in talks to acquire Star Cement. This is a part of its business strategy to further extend its hold over the cement manufacturing sector. Star Cement is currently the largest manufacturer of cement in the northeastern region. The company also has the highest market share in the region. Its total current installed capacity is 7.7 MTPA. It also has a 1.67 MTPA integrated cement plant in Meghalaya along with four grinding units. The company plans to expand its capacity to 25 MTPA by 2030. This position Start Cement as a lucrative investment opportunity for the Adani Group. It will help the global conglomerate in meeting its target cement capacity. The Adani Group will also be able to position itself as one of the biggest players in the country’s cement sector.
Various Acquisitions Taken Up By The Adani Group In The Cement Sector:
The Adani Group has decided to take up a new acquisition in the cement sector at a time when the cement industry is witnessing a huge number of merger and acquisition activities. The Adani Group is also currently in the process of increasing its stakes in the sector and further strengthening its hold in the industry. The Adani Group acquired two of the largest cement companies Ambuja Cements and ACC in September 2022 for 6.4 billion USD. This has made the Adani Group the largest cement player in India right after UltraTech.
In December 2023, amidst the controversies of the Adani Case, the Adani Group acquired Sanghi Industries Limited at an enterprise value of INR 5,185 crore. This acquisition was funded through internal accruals. In January 2024, the conglomerate acquired 100% stakes in Penna Cement Industries Limited which is a Hyderabad-based cement company. This acquisition was made for an enterprise value of INR 10,422 crore. The acquisition was a part of Adani Group’s strategy to achieve a capacity of 140 MTPA by 2028. The Adani Group has various other acquisition plans in the upcoming years as well which will further allow it to extend its hold over the cement sector.
The firm is also currently working on expanding its current facilities so that the cement manufacturing capacity increases.
Why Take Up Acquisitions In The Cement Sector?
Now you must be wondering why the Adani Group is so interested in the cement sector. Well, there are quite a few reasons for the same. The cement sector is a highly lucrative sector from a revenue point of view. It will allow the Adani Group to further enhance its business profitability and bring synergies in the business after the controversies of the Adani Case. This is going to turn out to be a highly profitable venture for the conglomerate. Also, in the next few years, our country is about to experience a massive infrastructure. As you know, the Adani Group already has an extensive presence in the infrastructure sector. By further enhancing its hold over the cement sector, it will be able to become an integral part of the infrastructure growth that is about to take place in our country.
Conclusion:
The Adani Group already has an extensive presence in the cement sector. With this new acquisition, it will be able to further extend its hold over this business sector and build itself the position of being the biggest cement player in the country. The company’s revenue generation will also increase post the Adani Case controversies.
