Increased Capital Expenditure Will Enable Adani Cement to Achieve Growth Targets Ahead of Schedule

Adani Cement is accelerating its capital expenditure to achieve growth targets sooner, according to Ajay Kapur, CEO of Adani Group Cement Business. The group recently acquired Orient Cement and aims for a manufacturing capacity of 140 million tonnes per annum (MTPA) by the fiscal year 2028. This expansion will enhance growth, reduce costs, and improve synergies, positioning Adani Cement as a market leader with sustainable performance.

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Currently, Adani Cement has a market share of 15% in India and aims to increase it to 20% by FY28. The company is expanding through both organic and inorganic means. It expects cement demand to rise by 4-5% this fiscal year, driven by government infrastructure projects and affordable housing initiatives. India's per capita cement consumption is 275 kg, with potential growth over the next decade.

Adani's Strategic Acquisitions

The Adani conglomerate, led by billionaire Gautam Adani, is acquiring smaller competitors to challenge UltraTech Cement, part of the Aditya Birla group. In the past year, Adani has made significant acquisitions including Penna Industries, Sanghi Industries, and Orient Cement. Additionally, its subsidiary ACC has acquired Asian Concretes and Cements.

With Orient Cement's acquisition, Adani's operating cement capacity will reach 97 million tonnes. The company plans to commission a 4 million tonne clinker in Bhatapara, Chhattisgarh, along with grinding units in Kanakrel and Farakka in West Bengal, and Sindri in Jharkhand by the end of this fiscal year. This will increase capacity to 100 MTPA by FY25.

Capacity Expansion Plans

Adani Cement is working on several projects across India to boost its capacity to 118 MTPA by the end of the next fiscal year. Currently, 21 MTPA capacity is under execution with another 21 MTPA at various stages of development. The company has identified 13 additional grinding unit projects for which land acquisition and approvals are underway.

Ambuja Cement, part of the Adani Group housing all cement assets, is debt-free with cash reserves of Rs 10,135 crore as of September 2024. During the first half of the fiscal year, Rs 14,700 crore was spent on growth initiatives. Of this amount, Rs 12,350 crore was allocated for organic and inorganic expansion.

Cost Reduction Initiatives

Since entering the cement sector in September 2022 after acquiring Ambuja Cement from Holcim for USD 6.4 billion (approximately Rs 51,000 crore), Adani has reduced logistics and other costs by 18%. Various capital and operational expenditure programmes are in place to further enhance cost leadership.

The Indian cement market has an installed capacity of 541 Metric Tonnes (MT), according to the Cement Manufacturers Association. UltraTech Cement Ltd., part of the Aditya Birla group, leads with a consolidated capacity of 152.7 MTPA. It plans to acquire The India Cements Ltd and aims for a capacity milestone of 200 MTPA by FY27.

Adani currently holds an 89 MTPA capacity after adding 22 MTPA in the last two years. The group's strategic acquisitions and expansions have positioned it well to compete with industry leaders while reducing costs significantly since entering the cement business.