Team News Riveting
Mumbai, September 19
Chairman of Adani Group Gautam Adani today explained why company ventured into the cement business and become the second largest producer in the country in a single stroke.
“I am often asked the question – Why cement? Let me therefore talk about the rationale for us moving into this business,” Gautam Adani said at the event in Mumbai organised to mark the completion of acquisition of Ambuja Cements and ACC on 17 September 2022. “It starts with our unshakeable belief in the India story and our conviction that India will be a 25 to 30 trillion-dollar economy by 2050,” he said.
While India is the second largest producer of cement in the world, the per capita consumption is just 250 kg compared to 1600 kg of China, the Adani Group Chairman said. This is almost a 7x headroom for growth. Furthermore, as several of the Government’s programs gather momentum, the long-term average growth in cement demand is expected to be 1.2 to 1.5 times the GDP. They anticipate growing at twice this number.
“Therefore, as our nation’s growth story unfolds with trillion-dollar investments in infrastructure and housing, cement is an attractive adjacency to our infrastructure business, especially the Group’s ports and logistics business, green energy business, and the ecommerce platform being developed,” Adani said. These adjacencies give them a significant competitive advantage and puts in a position to gain unmatched scale.
He said, “I also believe that the Adani Group’s competency in driving operational efficiency is second to none and we will benefit from the learnings of several acquisitions we have made over the past years. As a result, we expect significant margin expansion to become the most profitable cement manufacturer in the country. And we anticipate going from from the current 70 million tons capacity to 140 million tons in the next 5 years. Needless to say, a large part of my confidence comes from the combined strength of the leadership we are getting from ACC and Ambuja.”
Adani said they now own two of the most iconic brands in the country. “One that defines the ‘grit’ of pre-independence India and another that defines the ‘spirit’ of a confident India,” he said, adding that the acquisition is Indian’s largest ever inbound M&A transaction in the infrastructure and materials space and closed in a record time of 4 months. Their entry into this business is happening at a time when India is on the cusp of one of the greatest economic surges seen in the modern world, the Adani Group Chairman said.
