Adani Cement is accelerating its capital expenditure to meet its growth objectives earlier than planned, as stated by Ajay Kapur, CEO of Adani Group’s Cement Business, during an investor call on Monday. Following the recent acquisition of Orient Cement, the group aims to achieve a manufacturing capacity of 140 million tonnes per annum (MTPA) by the end of FY28.
Kapur noted that the increased pace of capital expenditure will enable Adani Cement to achieve its goals more swiftly while enhancing growth, reducing costs, and leveraging synergies to gain market leadership and ensure sustainable performance. As of September 2024, Ambuja Cement, which encompasses all cement operations under the Adani Group, remains debt-free, with cash reserves amounting to ₹10,135 crore. Approximately ₹14,700 crore has been spent in the first half of the fiscal year, with ₹12,350 crore allocated for both organic and inorganic growth.
To compete with UltraTech, India’s largest cement producer, Adani has recently completed three major acquisitions: Penna Industries, Sanghi Industries, and the newly announced Orient Cement. Following the acquisition, Adani’s operating cement capacity will increase to 97 million tonnes, with plans to commission a 4 million tonne clinker facility in Chhattisgarh and associated grinding units by the end of this financial year, aiming for a total capacity of 100 MTPA in FY25.
Additionally, various projects are underway to boost capacity across India, with a forecasted capacity of 118 MTPA by the end of the next fiscal year. Currently, 21 MTPA of capacity is under execution, and another 21 MTPA is in various planning stages. Kapur mentioned that the company is also working on 13 new grinding unit projects, with land acquisition and necessary approvals underway to reach the 140 million tonne target by FY28.
Adani Cement holds a 15% share of the Indian cement market, with aspirations to increase this to 20% over the next three fiscal years. The company anticipates cement demand to rise by 4% to 5% this fiscal year, driven by government initiatives focused on infrastructure and affordable housing. Kapur emphasized that India’s per capita cement consumption of 275 kg has significant growth potential, projecting that the market could reach a billion tonnes in the next decade.
Since entering the cement sector in September 2022 by acquiring controlling stakes in Ambuja Cement, the company has achieved a capacity of 89 MTPA, including a 22 MTPA increase in the past two years. The expansion and acquisitions have also contributed to a reduction in logistics and other costs, with an 18% decrease since September 2022. Adani Group’s strategic capex and opex initiatives are designed to enhance cost leadership in the market.
