Billionaire Gautam Adani on Sunday won the race to acquire Swiss cement major Holcim's stake in Ambuja Cements and its subsidiary ACC for $10.5 billion (around ₹81,361 crore), including the open offers.
Adani's Cement Play: How the big players rank against each other now
The cement industry equations have changed as a result of this transaction. Adani Group now emerges as the country's second-largest cement manufacturer, with 70 million tonnes of capacity annually.
According to sources, Ambuja Cements Limited and ACC Limited currently have a combined installed production capacity of 70 million tonnes per annum (MTPA). They have 23 cement plants, 14 grinding stations, 80 ready-mix concrete plants, and over 50,000 channel partners across India.
Aditya Birla group’s Ultratech had sought additional time to close the deal by promising to sell its overlapping plants in Gujarat and Madhya Pradesh. The Adani group, on the other hand, had promised to close the deal with the bankers as soon as possible, allowing them to win the transaction, according to media reports
JSW group chairman Sajjan Jindal had recently said his group has offered $7 billion to Holcim for its Ambuja stake, which includes $4.5 billion of his own money and $2.5 billion investment from the private equities.
The open offer price per share for Ambuja Cements will be ₹385 while that of ACC will be at ₹2,300, according to a stock exchange filing.
Industry experts believe that this acquisition is a big win for Gautam Adani.
Meanwhile, Adani Enterprises' shares closed 2.5% higher on the BSE at ₹2,105 per share.
India is the second-largest producer of cement in the world. It accounts for more than 7% of the global installed capacity, according to IBEF.
India has a lot of potential for development in the infrastructure and construction sectors, and the cement sector is expected to largely benefit from it. Some of the recent initiatives, such as the development of 98 smart cities, are expected to provide a major boost to the sector.
Cement production reached 329 million tonnes (MT) in FY20 and is projected to reach 381 MT by FY22. However, consumption stood at 327 MT in FY20 and will reach 379 MT by FY22.
The cement demand is estimated to reach 419.92 MT by FY 2027.
As per ICRA, in FY22, cement production in India is expected to increase by 12% YoY, driven by rural housing demand and the government’s strong focus on infrastructure development.
According to Crisil Ratings, the Indian cement industry is likely to add 80 million tonnes (MT) capacity by FY24, the highest in the last 10 years, driven by increasing spending on housing and infrastructure activities.
Higher infrastructure allocations in the union budget for FY23 – US $26.74 billion for roads and US $18.54 billion for railways – are expected to boost cement demand.
Here are the top Cement players in India
UltraTech Cement Limited is the cement flagship company of the Aditya Birla Group. A $ 5.9 billion building solutions powerhouse. It is the largest cement company in India and one of the world's most prestigious cement producers.
UltraTech is the largest producer of grey cement, white cement, and ready-mix concrete in India (RMC). The company has an installed capacity of 116.75 million tonnes per annum, it website shows.
It is the third-largest cement producer in the world, excluding China. UltraTech is the only cement company globally (outside of China) to have 100+ MTPA of cement manufacturing capacity in a single country. The company’s business operations span UAE, Bahrain, Sri Lanka, and India.
|Financials ( ₹in Cr)||Mar-2022||Mar-2021||Mar -2020||Mar-2019|
|Profit Before Tax||8,293.1||7,896.1||5,219.8||3,492.4|
|Basic EPS (Rs)||245||185.2||189.2||84.3|
UltraTech has a network of over one lakh channel partners across the country and has a market reach of more than 80% across India.
In 2013, Ultratech acquired Jaypee Group's Gujarat cement unit for ₹3,800 cr and in 2017 it acquired Jaiprakash Associates' six integrated cement plants for ₹16,189 cr.
Further, in 2018, it entered into a scheme of arrangement with Century Textile and Industries to demerge Century's cement business into Ultratech.
In 2018, it acquired Binani cement for ₹7,266 crore.
UltraTech Cement reported a 47.6 per cent year-on-year (YoY) rise in consolidated net profit at ₹2,620 crore for the quarter ending 31 March 2022. The company had reported a net profit of ₹1,775 crore in the year-ago period.
The company's net sales rose 9.3 per cent YoY to ₹15,557 crore in the quarter under review from ₹14,232 crore in the same quarter last fiscal.
Ambuja Cements Limited
Ambuja Cement Ltd. was formerly known as Gujarat Ambuja Cement Ltd. The leading cement company was founded in the year 1983. It is headquartered in Mumbai, Maharashtra.
Gujarat Ambuja Cements Ltd was renamed Ambuja Cements Ltd afterwards. In 2006, Holcim, a multinational cement company, gained management control of ACL.
According to its website, the company has a cement capacity of 31 million metric tonnes, six integrated manufacturing plants, and eight cement grinding units in India.
|Financials ( ₹in Cr)||Dec-2021||Dec-2020||Dec-2019||Dec-2018|
|Profit Before tax||2,785.2||2,414.4||1,948||1,506.1|
Ambuja Cement has provided hassle-free, home-building solutions with its uniquely sustainable development projects and environmentally friendly practices since it started operations.
Ambuja Cements is one of the world's most efficient cement makers. Its environmental protection efforts are considered among the best in the country. It is also one of India's most profitable and innovative cement firms.
It is the first Indian cement company to construct a captive port with three terminals along its western coastline to permit timely, cost-effective, and environmentally friendly bulk cement exports to its clients.
Ambuja Cements has also pioneered the development of multiple biomass and co-fired technologies for generating greener power in its captive plants.
ACC Limited (Formerly The Associated Cement Companies Limited) an Indian cement producer. On 1 September 2006, the name of The Associated Cement Companies Limited was changed to ACC Limited.
Over eight decades ago, eleven cement companies belonging to Tata, Khatau, Killick Nixon, and FE Dinshaw groups merged to form a single entity, The Associated Cement Companies.
ACC includes 17 cement manufacturing units, almost 90 ready-mix concrete plants; over 6,600 skilled personnel; a broad distribution network of 50,000+ dealers and retailers, and a nationwide sales network.
ACC Cement is ranked among the top cement manufacturers in India. The company has its presence across the nation with a strong marketing setup, contributing to building national infrastructure.
|Financials ( ₹in Cr)||Dec-2021||Dec-2020||Dec-2019||Dec-2018|
|Profit Before tax||2,460.4||1,687.8||2,031.5||1,494.3|
|Profit After Tax||1,820.3||1,414.9||1,358.9||1,506.6|
|Basic EPS (RS)||96.9||75.3||72.4||80.2|
In 2005, ACC became part of the Holcim Group of Switzerland. Subsequently, in 2015, Holcim and Lafarge came together in a merger to form LafargeHolcim.
On April 14, April 2022, Holcim announced that it would exit from the Indian market after 17 years of operations as part of a strategy to focus on core markets, and listed its stakes in ACC and Ambuja Cements for sale.
Holcim, through its subsidiaries, holds 63.19% in Ambuja Cements and 54.53% in ACC (of which 50.05% is held through Ambuja Cements).
Shree Cement Ltd. was incorporated in 1979 by the renowned Bangur family based out of Kolkata. set up the first cement plant in 1985 with an installed capacity of 0.6 Mtpa. Currently, the company has an aggregated cement production capacity of 47.4 million tonnes.
|Financials ( ₹in Cr)||Mar-2021||Mar-2020||Mar-2019||Mar-2018|
|Profit Before tax||3,025.7||1,960.2||1,081.4||1,827.2|
|Profit After Tax||2,311.9||1,570.2||951||1,384.2|
|Basic EPS (Rs)||445.1||273||391.3||384.4|
The company's manufacturing operations are distributed across North and East India, covering about six states.
It was also one of the first companies in the industry to adopt alternative fuels in cement manufacturing, and it now boasts the world's second-largest installed capacity of waste heat recovery power plants, trailing only China.
SCL has a commercial power capacity of 300 MW, as well as 442 MW of captive and green electricity capacity.
Nuvoco Vistas Corp
The company, Nuvoco Vistas Corp. Ltd., is the fifth-largest player in India and the largest cement company in East India, in terms of capacity, with a consolidated capacity of 22.32 MMTPA, the company website shows.
|Financials ( ₹in Cr)||Mar-2021||Mar-2020|
|Profit Before tax||99.5||386.8|
|Profit After Tax||22.8||249.2|
|Basic EPS (Rs)||0.7||10.3|
Nuvoco Vistas Corp. Ltd, a Nirma Group company, started operations in India in 1999 via acquisitions. Nirma Group forayed into the cement business in 2014 through a greenfield cement plant in Nimbol. Thereafter, it has grown the cement business through the acquisition of the Indian cement business of LafargeHolcim in 2016 and NU Vista Limited (formerly Emami Cement Limited) in 2020.
The company had 11 cement plants in north India. It comprises five integrated units, five grinding units, and one blending unit.