Ambuja, ACC capacity to double to 140 mtpa in 5 years: Gautam Adani

Both companies will become country's most profitable cement firms as margins will go up due to rising demand: Gautam Adani

The capacity of Ambuja Cements and ACC will increase from the current 70 million tonnes to 140 million tonnes in the next five years, and both companies will become the country’s most profitable cement companies as margins will go up due to rising demand, Adani group Chairman Gautam Adani said a day after closing the Ambuja transaction.

“Needless to say, a large part of my confidence comes from the combined strength of the leadership we are getting from ACC and Ambuja. Every action we take must align with national priorities and pass through the lenses of this belief,” Adani said.

Addressing employees of both companies on Saturday, Adani said the acquisition of companies was a historic occasion, since, in a single stroke, the Adani group has become the second largest cement manufacturer in the country. UltraTech is India’s largest cement company with 120 mtpa capacity.

“We 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 $6.4 billion acquisition was India’s largest ever inbound M&A transaction in the infrastructure and materials space and closed in a record time of four months.

“Our 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,” he said.

On the rationale to enter the industry, Adani said the group believed that India will be a $25-30-trillion economy by 2050. “The numbers are known to all of you, while India is the second largest producer of cement in the world, our per capita consumption is just 250 kg compared to China’s 1,600 kg. This is almost a seven-time headroom for growth. Further, as several government programmes gather momentum, the long-term average growth in cement demand is expected to be 1.2-1.5 times of the GDP. We anticipate growing at twice this number,” he said.

Adani said as India’s growth story unfolds with trillion-dollar investments in infrastructure and housing, cement is an attractive adjacency to their infrastructure business, as the group’s ports and logistics business, green energy business, and the e-commerce platform are being developed. “These adjacencies give us a significant competitive advantage and put us in a position to gain unmatched scale. 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," Adani said.

Adani said the group is now the world’s largest solar power company and leading the greening of India. “We are also leading the global green hydrogen story having committed $70 billion to this business. We are the largest airport operator in the nation with 25 per cent of passenger traffic and 40 per cent of air cargo and we are the largest ports and logistics company in India with 30 per cent national market share,” he said.

“We have won some of the largest road contracts in the country and are well on our way to becoming the largest player in this sector,” he said. “We had a grand IPO of Adani Wilmar — making us the highest-valued FMCG company in the country and we have declared our path forward in multiple new sectors that include data centres, super apps, aerospace and defence, industrial clouds, metals, and petrochemicals,” Adani said.

On the group finances, Adani said the group was now stronger than ever before, and it continues to raise billions of dollars from international markets and strategic partners to further accelerate growth. “Our market cap now stands at $260 billion — having grown faster than any company ever in India,” he said.

Why the acquisition
 

1. Per capita cement consumption to grow 7x
2. Centre’s focus on infrastructure to boost cement sales
3. India will be a $25-30 trillion economy by 2050
4. Ambuja, ACC to grow faster than the industry