MC Exclusive | Adani Group evaluates acquiring Star Cement for expansion in NE

File photo

Adani Group unit Ambuja Cement is in talks to acquire Star Cement, a market leader in the North East, as part of its expansion strategy, according to people familiar with the matter. The group is said to have appointed consultancy firm EY for evaluating the deal, they said.

Adani Cement did not immediately respond to requests for comment.

Star Cement clarified that it is not engaged in any discussions with the group and called the development as 'speculative'.

"The company is always evaluating options for growth opportunities," said an Adani Group official. The move comes as most major cement players are setting sights on Assam and the North East as a potential market for expansion. UltraTech is building a greenfield 1.2-MTPA grinding unit in Assam, scheduled to go on stream in FY27.

JK Lakshmi Cement too is setting up a clinkerisation unit with a capacity of 1 MTPA and a cement grinding unit of 1.5 MTPA in Assam, it said in an investor presentation earlier this year.

Star Cement has the highest market share in the north eastern region. The company's total installed capacity stands at 7.7 million tonnes per annum (MTPA) with a 1.67-MTPA integrated cement plant in Meghalaya and four grinding units. The company aims to expand this capacity to 25 MTPA by 2030. The promoter shareholding of the company is 66.47 percent.  The promoters of Star Cement are Sajjan Bhajanka and Prem Kumar Bhajanka, who own 11.85 percent and 10.20 percent stake in the company.

During an analyst call last month, the management of Star Cement addressed the prospects of potential consolidations in the region, flagging unique challenges and dynamics that cement players could face. "I think the process is a bit more complicated in the North East  because of the land acquisition, the possession, the locals, and even the legality of the mines. I think anyone who attempts to put up a plant will at least take four-five years," a senior executive of Star Cement said on potential consolidation in the region.

"In terms of consolidation in other parts of the country, I think it's good for the industry because, I mean, most of these areas were highly fragmented. And, for any pricing discipline and for decent profitability, I think there was a need for a consolidation, which is happening," said the executive.

The other key players who have presence in the region include Dalmia Cement (5.6 MTPA capacity) and Amrit Cement (1.5 MTPA).  Dalmia Cement is also set to commission a 2.4-MTPA cement capacity in Assam, and a 0.5 MTPA unit in Bihar, in FY25.  The interest of key players stems from a substantial boost in infrastructure development across sectors such as transportation, energy, digital connectivity, and industrial growth in the North East.