India is the world’s second largest producer of cement, yet its consumption stands at 250 kg per capita as compared to the global average of 525 kg per capita. But things are expected to change with the government investing $1.4 trillion between 2019 and 2023, leading to an uptick in construction activity. In addition to that, more than 40 per cent of India’s population is expected to move to cities by 2030, creating a demand for 25 million new homes. Sensing this growth, Adani has announced its plans to double its cement production capacity after the acquisition of Ambuja cement.
Major expansion afoot
Adani completed the purchase by acquiring Holcim’s 63 per cent stake in Ambuja and 4.48 per cent stake in ACC. The expansion was driven by a strategy to benefit from the scope for a seven fold increase in the demand for cement in India. Speaking at an event he added that Adani will increase its cement production capacity from 70 million tons to 140 million tons. He also called the development historic, considering that it is the largest inbound M&A transaction in India’s infrastructure and materials sector ever.
Counting on India’s infrastructure push
India’s infrastructure is expected to grow at a rate of seven per cent between 2022 and 2027, with 42 per cent projects in the National Infrastructure Pipeline already under implementation. Among such projects, Adani has bagged the contract to build three stretches of the Ganga Expressway in UP, in a deal worth Rs 17,500 crore. The group which also operates airports in Mumbai, Jaipur, Ahmedabad, Lucknow, Mangaluru, Guwahati and Thiruvananthapuram, is also planning to build atrocities around them.
Biting into the realty pie
On the real estate front, Adani Realty is discussing a merger with DB Realty, which is owned by Vinod Goenka and Shahid Balwa, who were acquitted in the 2G scam. The firm had also been raided by CBI in connection to the Yes Bank-DHFL fraud case, and had defaulted on a Rs 700 crore loan. Adani Good Homes has partnered with DB Realty for multiple projects, and its stock also doubled after news of a merger with Adani Realty.
With infrastructure contracts and real estate projects in its kitty, the Adani empire will itself benefit by scaling up its cement production capacity.