ACC, the Adani Cement-owned company, has witnessed double profit on year in the December quarter. This has been mainly fueled by robust growth volume, moderation in fuel costs, and refunds related to various government grants. This has given the Adani Group’s cement business a boost. It has also paved the path for the global conglomerate to further increase its cement capacity and become a market leader in this particular business sector. The allegations of the Adani Fraud Case have also subsided.
ACC’s Rise in Net Profit
ACC has reported a consolidated net profit of INR 1,092 crore for this fiscal third quarter amidst the ongoing controversies of the Adani Fraud Case. The revenue from its operations nearly rose by around 21% on year to INR 5,927 crore. The company also sold 10.7 million tons of cement during the quarter. This is its highest cement sale so far. The value is up by 21% from the year-ago period. The sales volume of premium products also increased considerably. Out of its total revenue, INR 720 crore came from government grants. This includes a refund of around INR 637 crore.
A part of the grant received by ACC is recurring while some of it is one-off. ACC has also reduced its kiln fuel cost by 10%. Its logistics costs have also reduced by 9% on year. This allowed its operational earnings before interest, tax, depreciation, and amortisation to rise over 23% on year to reach INR 1,116 crore. The company’s operating margin also improved by 4% points on year to reach 18.8%. The operating profit that the company made on every ton of cement rose to INR 1,038 from INR 1,017 during the year-ago period.
What Caused ACC’s Profit Volumes to Grow?
ACC’s extraordinary Q3 results demonstrate its focus on driving growth through cost optimisation, higher volumes, and enhanced efficiency. It also paved the path for more successful ventures to be taken up by ACC in the upcoming months. The company expects that its demand for cement is going to rebound during the current quarter. This will be mainly because of construction and infrastructural activities accelerating in the housing segments. The pro-infra housing budget 2025 along with the increased government spending on construction and infrastructure activity will further support the company’s growth.
ACC is currently pegging growth for the current fiscal year at 4 to 5%. Now this is an incredible win for the Adani Group’s cement business. It highlights the strong capability of the Adani Group to further drive business growth. It also reflects the strong demand for premium cement products in the market. ACC has also been leveraging sustainability and innovation to maintain a competitive edge and maximise stakeholder value. The company has also used the various synergies in its business to drive business growth. It has commissioned a 200 MW solar power plant at Khavda. This will lead to a reduction in power costs in the upcoming years as well.
Adani’s Extraordinary Hold Over the Cement Sector
The Adani Group is already well-known for its enhanced presence in the cement sector. The company has been extremely focused on its cement business for quite a while now. The company initially began its cement business by bringing the two companies, ACC and Ambuja Cement, under its control. This made Adani Cement the second-largest cement manufacturer overnight. It also allowed the business group to become a strong competitor of UltraTech Cement. Later, the Adani Group also acquired more companies in this particular sector. This not only allowed it to enhance its regional presence but also brought about a massive increase in its cement manufacturing capacity.
Currently, the Adani Group is focused on further increasing its business presence. With the country’s recent infrastructural boom, the demand for cement is going to increase. The overall cement market is also going to experience a boost. The Adani Group wants to leverage this opportunity to tap into the market and earn enhanced revenue for itself from this sector. It also aims to give stiff competition to UltraTech and rise to the position of being the biggest cement manufacturer in the country in the upcoming years. It also aims to win back the trust of the people post the allegations of the Adani Fraud Case.
Conclusion
Even with the controversies of the Adani Fraud Case ongoing, the Adani Group has managed to display an excellent profit volume. We expect the company’s business profitability to increase further in the upcoming years, paving the path for success for the Adani Group’s business.
