Adani to acquire Holcim’s India cement businesses; will become the second-largest player 

Marking the exit of Holcim from India, after a high-profile acquisition in 2004, the Adani family, through a special purpose vehicle has acquired a significant cement capacity of around 70 million tonnes per annum for $10.5 billion. This deal, according to a media statement from Adani, makes it the largest in the infra and materials space. 

The buyout will catapult Adani group to the second-largest player in India’s cement industry, which has an installed capacity of around 500 million tonnes. UltraTech with 120 million tonnes per annum will remain the largest by a distance. 

The buyout of Holcim’s operations in India brings to the Adani group two cement companies – Ambuja Cements and ACC. In terms of shareholding, Holcim holds 63.19 per cent in Ambuja and 54.53 per cent in ACC. The transaction will trigger an open offer for the two companies (both are listed) and the deal size takes that into consideration. 

From a strategic point of view, the buyout of Holcim brings several advantages to the Adani group. With its play in infrastructure, through ports, power and road, cement complements that well and also gives it a significant foothold in commodities. 

Last June was when it was first made public its plans to get into the cement business and this acquisition will, in one stroke, bring to the table scale and quality. Ambuja and ACC are known to have high-quality plants adhering to environmental standards. A global merger between Holcim and Lafarge, apart from the reluctance to pick up cement assets in India, saw Ambuja and ACC not increasing their capacity significantly. 

For Adani, with no readymade operation in cement, the deal is unlikely to face any serious difficulty with the Competition Commission of India. In terms of the pecking order, the third-largest player will now be Shree Cement followed by Dalmia.   

With a presence in ports, the Adani group can transport cement through the sea from the west to the east coast, saving both time and money. Again, being in the power transmission business lends itself to cutting costs in another critical area. This will not take into consideration the big-ticket foray into renewable energy, where the thrust will be on hydrogen. Assuming that takes off with the existing FMCG business managing to throw up agro-waste, the focus will be on cutting costs at every point. 

From a geographic point of view, ACC is known across the country, while Ambuja is stronger in the north and west. The deal ends any kind of dominance from the international cement players in India, with HeidelbergCement at 12.6 million tonnes per annum being the only one of any consequence.