cement sector even after Adani Group’s large acquisition of Holcim's 67.5 million tonnes (MT) cement assets. In the last week of November, Ultratech Cement, India's largest cement manufacturer, acquired 10.8 MT capacity of Kesoram Industries. It was the fourth major cement deal over the past one year.
In the past seven years, there have been thirteen mergers and acquisitions in India’s cement sector. Large cement firms are becoming larger by acquiring more cement assets than just opting for greenfield expansion. ET explains why companies have shown high preference for the inorganic route and what lies ahead for the sector.
What is the trigger for Ultratech Cement's aggressive push for consolidation?
In the twenty-third Annual General Meeting (AGM), Ultratech Cement's Chairman Kumar Mangalam Birla said that the company plans to achieve a cement capacity of 200 MT.
With this long-term vision in mind, Ultratech has completed four prominent cement deals in the past seven years. These include Jaypee Cement, Century Cement, Binani Cement and Kesoram Industries. In all, the company has added more than 53 MT capacity through acquisitions.
These acquisitions have further strengthened the company's dominant position in India's cement industry. At present, the company has a cement capacity of 143.3MT
How are cement firms expanding capacity?
At present, India's cement sector has a total capacity of around 596 MT. Cement makers are expected to add close to 34 MT capacity in the next two-three years through organic route (companies expanding their capacity on their own).