Ambuja Cements Acquires 24 New Limestone Mines, Strengthening Resource Reserves to 587 Mn Tonnes

Adani group firm Ambuja Cements has secured 24 bids for new limestone mines, amassing a total resource of 587 million tonnes, as stated in the company's annual report. This move is a significant part of the company's aggressive expansion strategy, adding to the 1 billion tonnes of reserve from Sanghi Industries, a Saurashtra-based company acquired by Adani for Rs 5,185 crore in November, 2023.

The acquisition of these mines is crucial for Ambuja Cements' self-sufficiency, with existing coal mines like Dahegaon-Gowari and Gare Palma catering to 40% of the company's coal requirements. The Adani group aims to achieve a capacity of 140 MTPA (million tonnes per annum) by 2028, leveraging a mix of brownfield expansions and acquisitions. With sufficient cash reserves, the group is well-positioned to reach this goal.

In line with its expansion plans, earlier this month, Adani Group announced the acquisition of Hyderabad-based Penna Cement for Rs 10,422 crore, an all-cash deal that will add 14 MTPA to Ambuja Cements' capacity, bringing it to a total of 89 MTPA. This acquisition enhances Ambuja Cements' market share in the Southern region of India and extends its reach into Sri Lanka.

Despite the substantial acquisition costs, ACL CFO Vinod Bahety assured that the company would still hold around Rs 10,000 crore in cash by the end of the year. Bahety emphasized that deploying this amount is expected to yield over 15% in terms of ROCE (Return on Capital Employed).

In addition to expanding its production capacity, Ambuja Cements is also investing heavily in green energy. The company has committed over Rs 10,000 crore to green power projects, aiming to power 60% of its expanded capacity through 1 GW of solar and wind power and a 376 MW waste heat recovery system by FY 2027-28. This initiative aligns with the company's strategy to increase the use of alternative fuels and enhance sustainability.

Furthermore, Ambuja Cements plans to expand the master supply agreement with its subsidiary ACC Ltd and the newly acquired Sanghi Industries Ltd (SIL). This agreement has already proven beneficial, with 5.6 million tonnes of cement and clinker (CLC) sold to ACC under the agreement. The synergy achieved through this agreement has led to enhanced operational efficiency, cost savings in logistics, and improved sustainability.

The Indian cement industry, the second-largest globally, reached a substantial size of 397 MTPA in FY 2022-23, driven by growth in the housing sector and infrastructure investments. Ambuja Cements anticipates the industry to grow by 9-10% in FY 2023-24, reaching 425-430 MTPA, with further demand increases expected in FY 2024-25. Over the next five years, the industry is projected to add 150-160 MTPA in capacity through both organic and inorganic expansions.

Image source-ambujacement.com