The Adani Group's announcement that it plans to merge its cement business, currently housed in three entities, Ambuja Cements, ACC, and Orient Cement, into one pan-India entity (Ambuja Cements) will help the Group streamline the Rs 35,000 crore business operationally, as well as through reduced costs, as it prepares to take on players such as UltraTech as well as smaller and regional cement players across India, according to analysts.
The Adani Group acquired both Ambuja and ACC from global cement giant Holcim in 2022, marking its entry into the cement business. The Adani Group ran Ambuja and ACC together through a common management, as well as a master services agreement for manufacturing.
Ambuja holds around 50 percent stake in ACC, with the Adani Group also holding a smaller stake directly in the company.
Since then, it has continued adding capacity both organically and inorganically, with the first major acquisition being Gujarat-based Sanghi Industries, followed by South-based Penna Cement and CK Birla Group-owned Orient Cement, for which it staved off a bid from Aditya Birla Group's UltraTech.
Ambuja holds around 73 percent stake in Orient Cement, whose market is largely in southern states like Telangana, Andhra Pradesh, Tamil Nadu, and elsewhere. The company is also seeking regulatory approval to merge Sanghi and Penna with itself.
According to a presentation circulated by Ambuja Cement following its move to merge the three entities into one, the merger will help simplify the manufacturing and logistics networks associated with the multiple firms that form part of Adani's cement universe and is also expected to grow margins. It will also help in better deployment of resources, including financial and human resources, to meet strategic goals, the company added.
"The merger will simplify and rationalise the network, branding and sales promotion related spends. This will optimise costs and improve margins by at least Rs 100 per tonne. The merger will facilitate achieving targeted cost, margin expansion, and growth metrics. The amalgamation will enable to deploy its financial, managerial, and operational resources more effectively. With all resources under the management of a single entity, both allocation and utilization can be optimized to support the group’s strategic objectives," the presentation said.
In all, Adani's cement business now has a total capacity of 107 million tonne per annum (MTPA), of which 57.6 MTPA is housed in Ambuja, including the capacities of Sanghi Industries and Penna Cement. ACC has a capacity of 40.4 MTPA, while Orient Cement has a cement manufacturing capacity of 8.5 MTPA. The Adani Cement portfolio includes 24 integrated units, 22 grinding units, and more than 116 ready-mix concrete plants.
According to company executives, Ambuja at the consolidated level is expected to finish FY26 with a capacity of around 118 MTPA, with the firm expected to reach a cement manufacturing capacity of 140 MTPA by 2028.
By comparison, UltraTech had a capacity of 183.4 MTPA at the end of FY25. Recently, the company announced an investment of more than Rs 10,000 crore to grow its cement capacity to 240.76 MTPA. UltraTech's new capacities expected to be commissioned in a phased manner from FY28. The new capacities will be added at both UltraTech, as well as its subsidiary The India Cements Ltd.
Markets welcome move
Analysts greeted the Adani Group's move to simplify the structure of its cement business with enthusiasm, with the move being anticipated over the past year after similar announcements for Sanghi Industries and Penna Cement.
"The merger simplifies the organisational structure and provides greater flexibility in the use of cash, enabling more efficient decision-making and capital deployment across the business," said Ravi Sodah, executive vice president, Elara Capital.
A note from Motilal Oswal Financial Services said that the restructuring is the next phase in the group achieving scale in the cement business, after a period of acquisitions and consolidation in the industry.
Motilal's report also noted that the Ambuja and ACC brands will continue operating independently, with each brand having significant equity both nationally and in some regional micro-markets. The merged entity will also continue to receive state-level industrial promotion incentives, such as from Uttar Pradesh, Maharashtra, and Madhya Pradesh, Motilal Oswal and JM Financial noted.
"With higher volume growth and improving profitability, we forecast blended EBITDA/tonne will increase from Rs 795 in FY25 to Rs 1,250 by FY28E," said the note from JM Financial.
Armed with a new group structure, and with new capacities and efficiencies. Adani Cement is expected to supercharge its play for leadership in the cement business, even with significant competition and sluggishness in prices.
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