Adani says decision to move into cement business rooted in its unshakeable belief in India story
Mumbai, September 19, 2022
Adani Group Chairman Gautam Adani has said that the rationale for the company's decision to move into the cement business was provided by his unshakeable belief in the India story and conviction that the country would be a 25- to 30-trillion dollar economy by 2050.
Speaking at an event here on Saturday to mark the completion of acquisition of Ambuja Cements and ACC by the Adani Group, which made his company the second largest player in the cement industry, Adani said that, while it is the second largest producer of cement in the world, India's per capita consumption is just 250 kg compared to 1600 kg of China.
"This is almost a 7x headroom for growth. Furthermore, as several of the Government’s programs gather momentum, the long-term average growth in cement demand is expected to be 1.2 to 1.5 times the GDP. We anticipate growing at twice this number," he said.
Adani said the acquisition of Ambuja Cements and ACC was a historic event because the company had, in one stroke, become the second largest cement manufacturer in the country.
"Historic because 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.
"Historic because this acquisition is Indian’s largest ever inbound M&A transaction in the infrastructure and materials space and closed in a record time of 4 months.
"Historic because 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.
Adani said that, as the nation’s growth story unfolds with trillion-dollar investments in infrastructure and housing, cement is an attractive adjacency to the group's infrastructure business, especially its ports and logistics business, green energy business, and the e-commerce platform being developed.
"These adjacencies give us a significant competitive advantage and puts 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. And we anticipate going from from the current 70 million tons capacity to 140 million tons in the next five years. Needless to say, a large part of my confidence comes from the combined strength of the leadership we are getting from ACC and Ambuja," he said.
Stressing that every action the company takes must align with national priorities and pass through the lenses of this belief, he said the outcomes of the group's value system and belief in nation-building were there for all to see.
Adani said the group was 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 dollars to this business. We are the largest airport operator in the nation with 25% of passenger traffic and 40% of air cargo. We are the largest Ports and Logistics company in India with 30% national market share. We are India’s largest integrated energy player spanning generation, transmission, distribution, LNG, LPG, city gas and piped gas distribution. Each of these businesses is growing at double digit rates.
"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.
"We had a grand IPO of Adani Wilmar – making us the highest valued FMCG company in the country. We have declared our path forward in multiple new sectors that include data centres, super apps, aerospace and defense, industrial clouds, metals, and petrochemicals.
"Our finances are stronger than ever before, and we continue to raise billions of dollars from international markets and strategic partners to further accelerate our growth. Our market cap now stands at 260 billion dollars – having grown faster than any company ever in India.
"And, of course, we are now the country’s second largest cement manufacturer," he said.
Adani said the acquisition of Holcim’s cement assets in India was the largest ever inbound M&A in the infrastructure and materials space in India.
"This is one of the several large transactions we have done in recent times. A common question in the minds of the people is about the Adani Group’s growth philosophy. This philosophy emerges from our belief in the India growth story and our belief in nation building. It emerges from the belief that in the new emerging world order, strength will come from self-reliance or what many of us call – Atmanirbharta. It emerges from the belief that no nation in the world is as well placed as India is – to capitalize on four vectors that will accelerate our nation’s development," he said.
"The first vector is our nation’s demographic dividend that has put us on track to becoming a 30 trillion-dollar economy by 2050. India’s median age will be just 38 years even in 2050.
"This will be backed by the second vector – the growth of our nation’s middle class. India’s population in 2050 will be about 1.6 billion. The world will never again see a middle class as large as the one India will have. The growth of this middle class will drive an unprecedented surge in demand and consumption.
"The third vector is the global drive for sustainability. Renewable power will drive a national green industrial revolution that is just being initiated. This will also be enabled by decentralized power generation which will be transformative, especially for the rural population. Decentralized power gives India the option to accelerate the micro-sizing of ‘everything’. It enables micro-manufacturing, micro-agriculture, micro-water, micro-healthcare, micro-banking, micro-education — everything that our nation’s rural population needs.
"And finally, the fourth vector is digitization. The combination of India’s youth and the growth in our middle class will accelerate our nation’s digital transformation to create new opportunities. I believe the unmatched digital ecosystem India is creating will generate significant additional uplift on top of our anticipated 8% GDP growth. It will accelerate our journey towards the 30 trillion-dollar GDP target by 2050," he added.