With Indian Prime Minister Modi stepping up investment in infrastructure, India's former richest man, Gautam Adani, has launched a series of acquisitions and expansions in cement production aimed at further consolidating market share. The moves triggered a counterattack from UltraTech, India's largest cement maker.
Since 2022, Adani Group has been involved in the cement industry and has rapidly grown into the second largest cement manufacturer in India. In June, the group announced the acquisition of Penna, the largest cement manufacturer in southern India, to further penetrate the southern Indian market and plan to increase its market share to more than 20% by 2027. The Adani Group's expansion campaign has attracted a lot of attention from UltraTech.
To fend off the Adani Group's offensive, UltraTech has also taken defensive measures, including paying $698 million to buy a 55% stake in India Cement Limited in batches. The company is also located in southern India and is an important cement producer in Tamil Nadu. UltraTech also said it plans to increase its annual cement production capacity to 200 million tons by 2027.
According to the Times of India, Modi announced plans to expand infrastructure construction after the 2024 general election, which is one of the key factors driving large-scale mergers and acquisitions in the cement industry. At present, there are hundreds of cement manufacturers in India, but UltraTech and Adani Group control about half of the total production capacity. Many small and medium-sized enterprises have received acquisition proposals from the two giants. Gupta, a
financial analyst, pointed out that there were certain risks in the "cement battle". On the one hand, fierce competition may trigger an antitrust review; on the other hand, Modi's term in office faces uncertainties. The two companies' large loans are betting on infrastructure development, but future changes in India's national policy may bring uncertain risks.
Relevant data show that the cement industry has shown great potential for supply growth due to the large number of high-quality limestone mineral resources in India. There are currently 210 large cement factories in India, 77 of which are located in Andhra Pradesh, Rajasthan and Tamil Nadu. Cement production capacity in the south of India accounts for 32% of the country's total production capacity, while the cement production capacity in the north, central and western regions accounts for 20%, 13% and 15% respectively, and the remaining 20% of the cement production capacity is distributed in the east of India. In fiscal year
2023, India's cement production reached 375 million tons, up 6.83% year-on-year. From 2012 to 2023, India's cement production capacity increased from 350 million tons to 570 million tons, with a cumulative increase of about 61%. In the next four years, India's cement production capacity will continue to expand at a compound annual growth rate of about 4% -5%, and by the end of fiscal year 2027, the total production capacity will reach about 720-730 million tons.
