The Adani Group is currently in discussions to purchase the Indian operations of Heidelberg Materials, a major German cement producer. This potential acquisition, led by Adani’s subsidiary, Ambuja Cements, is estimated to be valued at around $1.2 billion (or approximately ₹10,000 crore). If finalized, it would contribute to the ongoing consolidation trend in India’s cement industry, where leading player UltraTech has also been acquiring companies to maintain its market position.
Heidelberg, recognized as one of the world’s largest cement manufacturers, has a presence in 50 countries. The company’s Indian operations, which were established in 2006 through the acquisition of Mysore Cement and Cochin Cement, have seen significant growth, especially after its merger with Italcementi in 2016, effectively doubling its capacity in India.
Currently, a senior executive from Heidelberg is leading negotiations with Adani. However, discussions will need to address concerns regarding production capacity; while Heidelberg claims a capacity of about 14 million tonnes, this figure may be lower, potentially affecting the deal’s valuation.
In the Asia-Pacific region, Heidelberg has a total capacity of 53.5 million tonnes, with India ranking second after Indonesia. The company has been working on merging HeidelbergCement India with Zuari Cement, but this process has encountered delays related to stamp duty calculations, with completion projected for FY26 or FY27.
Adani’s Expansion in the Cement Market
Gautam Adani has established a $3 billion fund to strengthen his position in the cement sector, which has gained momentum recently. The Adani Group made a significant entry into the market by acquiring Ambuja Cements and ACC from the Holcim Group for over $6 billion—one of the largest deals in the materials and infrastructure sector. At the time, these companies had a combined production capacity of nearly 70 million tonnes.
Since then, Adani has continued to grow its cement portfolio with additional acquisitions, such as Sanghi Industries and a grinding unit from My Home Group. In June, Adani finalized an agreement to acquire Penna Cement Industries for an enterprise value of ₹10,422 crore, completed in August, which increased Adani Cement’s capacity to 88.9 million tonnes.
Moreover, Adani is also vying for a 46.64% stake in ITD Cementation India, a strategic move to enhance its civil engineering capabilities. This deal, valued at approximately ₹5,888.57 crore (around $700 million), includes an open offer following the acquisition of the promoter stake, with an official announcement anticipated soon.
Originally a UK-based engineering, procurement, and construction (EPC) firm, ITD Cementation India has undergone various ownership changes since India’s independence. Adani Cement aims to ramp up its production capacity to 140 million tonnes by 2028, though insiders suggest that the actual goal is even more ambitious.
Cement Prices Expected to Rise Amid Growing Demand in H2 FY25
According to a report by Centrum, cement demand is projected to increase by 5% in FY25, with several price hikes anticipated in the upcoming months. The report notes that cement prices experienced a 1.5% decline in Q2 FY25 due to weakened demand, particularly in the central region, where prices fell by 4% quarter-on-quarter. In contrast, eastern India maintained stable prices, showing a slight increase in September from a low base.
During this quarter, many cities saw their lowest cement prices in the past three to four years. However, following a period of price declines over the last few months, minor increases in August and September suggest that prices are set to rise in the coming months.
Several factors have adversely impacted demand, including delayed government spending following the general elections, an unusually heavy monsoon, and flooding in various regions of the country. Year-on-year, cement demand has contracted by 5-6%, but with recent capacity expansions, a growth rate of 2.7% is expected.
As demand picks up and prices rise, cement companies are projected to achieve a 5% growth for the entire FY25.
The report also highlights a significant drop in the earnings of cement companies due to lower demand and price reductions. EBITDA is forecasted to decrease to ₹704 per metric tonne, down ₹159 per tonne quarter-on-quarter and ₹220 per tonne year-on-year. However, a recovery in EBITDA per metric tonne is also anticipated.
Consolidation of demand in southern India and higher utilization rates in northern India are expected to drive pricing growth for cement companies in the latter half of FY25.
In conclusion, the report suggests that with a revival in demand and forthcoming price hikes, cement companies are likely to see improved earnings growth in the second half of FY25.
