Adani To Be India’s Second-Largest Cement Maker After Holcim Deal; A Look At Plans Ahead


With Adani Group acquiring a controlling stake in Holcim AG’s cement businesses to become India’s second-largest cement manufacturer, Gautam Adani said the group expects aggressive expansion and plans to double the existing 70 million tonnes per year capacity within the next five years. He added that the existing teams will be able to bring in the expertise to achieve the group’s growth plans going forward.

“Our move into the cement business is a validation of our belief in our nation’s growth story and our own capabilities. We had stated last year that this was a sector in which we would be investing and had already incorporated Adani Cement as a wholly-owned subsidiary. The drivers for this decision have been based on two primary factors. The demand-supply gap, and the synergies with our existing businesses,” Adani Group Chairman Gautam Adani has said in an interview with ET.

In a USD 10.5-billion deal, the Adani Group will acquire 63.1 per cent of Ambuja Cements Ltd along with related assets. Ambuja’s local subsidiaries include ACC Ltd, which is also publicly traded. Holcim, through its subsidiaries, holds 63.19 per cent in Ambuja Cements and 54.53 per cent in ACC (of which 50.05 per cent is held through Ambuja Cements).

On the financing of the buyout, Gautam Adani said an offshore special purpose vehicle will complete the acquisition. “The acquisition is fully funded by way of approved commitments from our relationship banks – Barclays, Deutsche Bank and Standard Chartered Bank – and equity infusion from the Adani family.”

He added that India is expected to remain one of the world’s largest demand-driven economies for the next several decades and the country continues to be the world’s second-largest cement market. But, India has less than half of the global average per-capita cement consumption.

He said India’s cement consumption is at about just 240 kg per capita, as compared to the global average of 525 kg per capita. “Cement is not a material you can import. You have to be naturally Atmanirbhar.”

Adani said the group’s strong pan-India distribution footprint, robust partner network, commonality in their best practices, and manufacturing and R&D expertise, apart from the existing capabilities of Ambuja and ACC, provide it with a robust foundation to build a formidable growth strategy.

“What we will add to the mix of capabilities is…our expertise in power generation, green power, multi-modal logistics presence and pan-India presence,” he said in the interview.

In a statement announcing the acquisition, the Adani Group said, “The value for the Holcim stake and open offer consideration for Ambuja Cements and ACC is USD 10.5 billion, which makes this the largest-ever acquisition by Adani, and India’s largest-ever M&A transaction in the infrastructure and materials space.”

The corresponding offer share prices of Rs 385 for Ambuja Cement and Rs 2,300 for ACC translate into cash proceeds of CHF 6.4 billion (Swiss Franc) for Holcim, it added.

Ambuja Cements and ACC currently have a combined installed production capacity of 70 million tonnes per annum. The two companies together have 23 cement plants, 14 grinding stations, 80 ready-mix concrete plants and over 50,000 channel partners across India.

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