The Adani Group is in advanced stages of discussion with the Odisha government to set up its first greenfield cement factory in the state, said a report by Mint. The development comes two years after the conglomerate began its journey in the cement industry with a series of acquisitions.
Ambuja Cements Ltd, a subsidiary of the Adani Group, is expected to build the facility with a production capacity of 4 million tonnes per annum (mtpa), at an estimated cost of Rs 3,000-3,500 crore, sources familiar with the negotiations, including a government official, told Mint. The report indicated that agreements with the government are in advanced stages, with the manufacturing facility projected to be operational within two to three years.
Queries sent to the Adani Group and the Odisha government by the daily remained unanswered, and Moneycontrol was unable to independently verify the report.
The Adani Group, which has focused primarily on acquiring cement businesses so far, is now prepared to kick off the construction of new facilities from the ground up as it aims to become India's largest cement producer. As part of its expansion strategy in the eastern region, Adani recently announced plans for a clinker grinding unit in Bihar, estimated to cost Rs 1,600-2,000 crore.
The Odisha plant will further bolster the group's footprint in the cement industry. Sources also told Mint that the manufacturing facility will have an estimated cost of $85-100 per tonne, representing the group’s inaugural greenfield cement capacity. The goal is to complete the plant by FY28.
On August 3, Adani revealed plans for a 6-mtpa cement grinding facility in Bihar, which is expected to cost around $45-50 per tonne. The group intends to finance most of its expansion efforts through internal accruals.
“Our greenfield plans are equally strong,” a source stated, noting that many of the acquisitions made by the group have significant potential for greenfield expansion, which will later integrate into their brownfield plans. Following the acquisition of Penna Cement in June, the cement division reportedly had Rs 10,000 to Rs 12,000 crore in its books, contributing to cash flows during the September quarter.
Despite the September quarter being leaner than others, it is projected that even if the open offer for the Orient Cement acquisition is fully subscribed, Ambuja Cements will retain Rs 4,000 to Rs 5,000 crore in cash. The company currently has no debt, and should the need arise for the greenfield project or additional acquisitions, a small amount of credit may be sought from banks.
Additionally, Adani has plans to invest Rs 5,500 crore in the cement and logistics sectors in Bihar, although this initiative is still in its early stages.
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