The Adani Group is in advanced discussions with the Odisha government to build its first greenfield cement factory, two years after embarking on its cement odyssey with a series of acquisitions.
Group company Ambuja Cements Ltd is likely to build the 4 million tonnes per annum (mtpa) unit at a cost of ₹3,000-3,500 crore, said two people aware of the matter, including a government official.
"The agreements with the state government are in advanced stages. This manufacturing facility will be ready in two to three years," one of the two people cited above said on the condition of anonymity.
Queries emailed to Adani Group and the Odisha government remained unanswered.
The Adani group that has so far only acquired cement businesses has also prepared a strategy to build new facilities from scratch, the person said, as the conglomerate aims to become India's largest cement maker. As part of its eastern foray, Adani recently announced plans to build a clinker grinding unit in Bihar for ₹1,600-2,000 crore. The Odisha plant will help the group expand its footprint further.
"The manufacturing facility will cost at least $85-100 per ton. This will be the group's first ever greenfield cement capacity. The group has finalized its discussions with the Odisha government and the target is to make the cement plant ready by FY28," the person cited above said.
On 3 August, Adani announced a 6 mtpa cement grinding facility in Bihar. "The grinding facility will cost around $45-50 per ton," the person said. The group plans to fund most of the expansion process through internal accruals.
Even after last week's acquisition of Orient Cement, Adani has enough money to buy more assets and build new plants, the person cited earlier said.
"Our greenfield plans are equally strong. In fact, most of the acquisitions, if one has observed, have substantial potential for their greenfield expansion opportunities, which, after acquisition, becomes a part of our brownfield plans," said the first person, adding that after the Penna Cement acquisition in June, the cement division had around ₹10,000-12,000 crore in books, which got added to the cash flows during the September quarter.
"Even though the September quarter was leaner than other quarters this time, even if the open offer for the Orient Cement acquisition gets fully subscribed, Ambuja Cements will still have ₹4,000-5,000 crore cash in the books. There is no debt and if required for the greenfield plan or any compelling acquisition, a small amount of credit may be availed of from banks," said the first person.
Meanwhile, Adani has a separate plan to invest ₹5,500 crore in cement and logistics sectors in Bihar, which is still in early stages.
Adani's plan is to take on chief rival and India's largest cement maker UltraTech Ltd in eastern India, where it has a significant presence, particularly in Bihar.
The Adani group has also announced an investment of ₹1,600 crore to establish a new cement grinding unit in Warisaliganj, Bihar.
"The Bihar plan announced in August is also part of a greenfield strategy. We have an industry advantage in terms of cost, since we have power generation and transmission capabilities and a wide logistics network. This cost advantage can be passed on to the end consumers of cement even if we adopt a greenfield strategy. This can't be copied by the competition," said one of the persons cited above.
Adani group's entry into cement and building materials space in 2022 has intensified consolidation in the industry, with both Adani group and Aditya Birla group aggressively expanding businesses via acquisitions.
After acquiring Penna Cement for over ₹10,000 crore in June, on 22 October, Ambuja Cements entered into a binding agreement to acquire 46.8% stake in Orient Cement, valuing the latter at Rs8,100 crore. The group said the acquisition helps it to move towards the target capacity of 140 mtpa by 2028.
Orient Cement has an existing 5.6 mtpa clinker and 8.5 mtpa cement operational capacity. The acquisition may improve Adani Group’s country-wide market share by 2% in the cement industry.
At its September quarter earnings announcement, UltraTech said that with the completion of its ongoing expansion plans by FY27 and the receipt of the statutory approvals for the acquisition of Kesoram Cements (10.75 mtpa) and The India Cements (14.45 mtpa), total cement capacity will surpass 200 mtpa. Meanwhile, even after Orient Cement acquisition, Adani's total operational capacity will barely cross 100 mtpa.
