Cement sector is on a capacity-addition spree

India’s cement industry is currently experiencing a surge in capacity expansion, primarily driven by the increase in investment in infrastructure projects, spending through both greenfield and brownfield expansions.

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In India, the cement sector is presently undergoing a notable upswing in expanding its capacity. This expansion is largely propelled by heightened investments in infrastructure ventures. The sector’s progress stems from a combination of both greenfield and brownfield expansions.

However, the existence of approximately 25 million metric tons per annum (MTPA) of distressed assets suggests that mergers and acquisitions could offer a convenient resolution.

The commencement of the process involves Ambuja Cements (ACL), now a component of the Adani Group, securing a 56.74% stake in Sanghi Industries (SIL) for an enterprise value of Rs 5,000 crore. However, this move is merely the initial phase. Subsequent to this acquisition, the capacity of Adani Cements (which encompasses Ambuja Cements and ACC) will rise to 73.6 MTPA from the existing 67.5 MTPA, although the hierarchical ranking will remain unaltered.

Taking the top spot is UltraTech Cement, leading the pack with an expansive capacity of 133 MTPA. Behind this, Adani Cement, formed through the consolidation of ACC and Ambuja Cements, holds a capacity of 67.5 MTPA. In the subsequent positions, we have Shree Cement with 49.9 MTPA, Dalmia Cement (Bharat) with 43.7 MTPA, Nuvoco Vistas boasting 25 MTPA, JSW with a capacity of 19 MTPA, and India Cements rounding off the list with a capacity of 16 MTPA.

As per Gautam Adani, the chairman of the Adani Group, leveraging SIL’s limestone reserves of one billion tonnes will enable ACL to augment cement production capacity at Sanghipuram to 15 MTPA within the upcoming two years. Additionally, coupled with the ongoing expansion of 14 MTPA and the initiation of 5.5 MTPA capacity at Dahej and Ametha, the Adani Group is projected to achieve a capacity of 101 MTPA by the year 2025.