Adani Cement announced on Tuesday that it has acquired Orient Cement, owned by the CK Birla Group, for ₹8,100 crore. This deal highlights the growing competition for market share in India’s cement industry, which is the second largest in the world by consumption and production capacity.
This acquisition is the third significant transaction in India’s cement sector this fiscal year, with about 34 million tonnes of capacity being transferred mainly to the leading companies, UltraTech Cement and Adani Cement.
As part of the deal, Ambuja Cements, a subsidiary of Adani, will buy a 37.90% stake from the promoters of Orient Cement and an additional 8.90% from public shareholders at ₹395.40 per share. After this, the company plans to launch an open offer to purchase another 26% at the same price. The entire transaction will be funded through internal resources.
Analyst Ravi Sodah from Elara Securities noted that the deal is valued at approximately $114 per tonne, which is higher than previous acquisitions of Sanghi Industries and Penna Cement but similar to the deal with India Cements.
Adani’s CEO Ajay Kapur has stated that there is no rush in the industry, and acquisitions are happening in a systematic way. He mentioned that their target cost for new growth is less than $80 per tonne and aims to reduce it further.
Other companies, including UltraTech Cement and JSW Cement, also showed interest in acquiring Orient Cement. In October 2023, CK Birla contacted Gautam Adani to discuss selling his stake.
Orient Cement operates three facilities in Maharashtra, Telangana, and Karnataka, with a production capacity of 8.5 million tonnes (mt). The company has the necessary approvals to increase production capacity by another 8.1 mt and possesses high-quality limestone reserves in Chittorgarh, Rajasthan.
The public shareholders from whom Ambuja Cements will acquire stakes include Rukmani Birla Educational Society, Shri Jagannath Educational Institute, and other trusts that are not part of the promoter group.
Subject to approval from the Competition Commission of India, Adani Cement aims to finalize the acquisition within three to four months.
Karan Adani, director of Ambuja Cements, stated that Orient Cement’s strategic locations and high-quality resources will allow them to expand cement capacity to 16.6 mt in the near future. This acquisition is expected to boost Adani Cement’s market share by 200 basis points and reduce freight costs, enhancing their competitive position in the market.
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