<p>Bengaluru: Consolidation in the cement industry in the current fiscal will see the top five players - Aditya Birla Group’s UltraTech Cement, Adani Group, Dalmia Cement (Bharat) Ltd and the Bengaluru-based Nirma Group’s Nuvoco Vistas Corporation Ltd - taking over 55% of the market share, according to a report released by rating agency, ICRA.</p><p>This follows their market share rising from 45% in March 2015 to 54% in December 2023.</p>.Adani group firm Ambuja Cements acquires Penna Cement at valuation of Rs 10,422 crore.<p>Remarkably, the report pointed out that while the organic expansion has been adopted in the medium term, the bigger growth path chosen by these companies is essentially inorganic, in pursuit of rapid capacity boosting. The past nine years have seen 15 mergers and acquisitions (M&A) in the cement industry with the average cost of this route at $80/MT (metric tonne) being lower than that of setting up an integrated greenfield project at $110-120/MT. In short, M&A spelt capex cost savings.</p><p><br>According to Anupama Reddy, vice president and co-group head, Corporate Ratings, ICRA, “Asset block of 28MT is in the pipeline for acquisition and ICRA expects M&A deals to continue, given the aggressive growth plans of the large incumbent players who want to maintain their market share.”</p><p><br>“ICRA expects the credit profile of cement producers to remain stable, driven by a healthy growth in operating income, improvement in operating margins and comfortable leverage metrics”, she added.</p> <p>The report also found the consolidation, while present pan-India, more rampant in the eastern and western regions. In fact, it estimates that the share of the top five players in these regions, which was 54% in FY15 to go up 76-79% in FY25. In the South, where the market is highly fragmented, this share, which was 40% in FY15 will move to 50% in FY25. On the other hand, the market share of top five players in the central and northern parts of the country, which was 65-75% in FY15 will edge up to 75-85% in FY25. </p><p>Barring the acquisition of ACC and Ambuja Cement by the Adani Group, most other M&As were precipitated by the cash flow-starved profile of the acquired entity, the report underscored. </p><p>Except the ACC and Ambuja acquisitions by the Adani Group, according to the report, other mergers and acquisitions (M&As) were largely owing to the cash flow-starved nature of the acquired entity or the group’s financial stress.</p>
<p>Bengaluru: Consolidation in the cement industry in the current fiscal will see the top five players - Aditya Birla Group’s UltraTech Cement, Adani Group, Dalmia Cement (Bharat) Ltd and the Bengaluru-based Nirma Group’s Nuvoco Vistas Corporation Ltd - taking over 55% of the market share, according to a report released by rating agency, ICRA.</p><p>This follows their market share rising from 45% in March 2015 to 54% in December 2023.</p>.Adani group firm Ambuja Cements acquires Penna Cement at valuation of Rs 10,422 crore.<p>Remarkably, the report pointed out that while the organic expansion has been adopted in the medium term, the bigger growth path chosen by these companies is essentially inorganic, in pursuit of rapid capacity boosting. The past nine years have seen 15 mergers and acquisitions (M&A) in the cement industry with the average cost of this route at $80/MT (metric tonne) being lower than that of setting up an integrated greenfield project at $110-120/MT. In short, M&A spelt capex cost savings.</p><p><br>According to Anupama Reddy, vice president and co-group head, Corporate Ratings, ICRA, “Asset block of 28MT is in the pipeline for acquisition and ICRA expects M&A deals to continue, given the aggressive growth plans of the large incumbent players who want to maintain their market share.”</p><p><br>“ICRA expects the credit profile of cement producers to remain stable, driven by a healthy growth in operating income, improvement in operating margins and comfortable leverage metrics”, she added.</p> <p>The report also found the consolidation, while present pan-India, more rampant in the eastern and western regions. In fact, it estimates that the share of the top five players in these regions, which was 54% in FY15 to go up 76-79% in FY25. In the South, where the market is highly fragmented, this share, which was 40% in FY15 will move to 50% in FY25. On the other hand, the market share of top five players in the central and northern parts of the country, which was 65-75% in FY15 will edge up to 75-85% in FY25. </p><p>Barring the acquisition of ACC and Ambuja Cement by the Adani Group, most other M&As were precipitated by the cash flow-starved profile of the acquired entity, the report underscored. </p><p>Except the ACC and Ambuja acquisitions by the Adani Group, according to the report, other mergers and acquisitions (M&As) were largely owing to the cash flow-starved nature of the acquired entity or the group’s financial stress.</p>