What Adani stands to gain from Holcim's India business acquisition

Asia's richest man Gautam Adani has clinched a $10.5-billion deal to acquire Holcim's Indian subsidiaries, including ACC Cements and Ambuja Cements, marking the ports-to-energy conglomerate's entry into the cement sector.

In the last couple of years, Adani has diversified beyond the core business of operating ports, power plants and coal mines into airports, data centres and clean energy.

Let us take a look at what Adani stands to gain from the acquisition of Holcim's India businesses:

The deal will make billionaire Adani Group the second-largest player in the domestic cement sector and help boost the company's existing cement businesses - Adani Cementation Ltd and Adani Cement Ltd.

Also Read — Adani to acquire Holcim India assets for $10.5 billion

Holcim owns 63.19 per cent in Ambuja Cements and 4.48 per cent in ACC. Ambuja Cements, in turn, owns 50.05 per cent in ACC.

Adani plans to double Ambuja-ACC's cement capacity to 140 million tonnes over 5 years.

"Not only is India expected to remain one of the world's largest demand-driven economies for the next several decades, India continues to be the world's second largest cement market and yet has less than half of the global average per capita cement consumption. When we combine this demand pattern of cement with our several existing businesses adjacencies that include the Adani Group's ports and logistics business, energy business, and real estate business, it is our view that we are well positioned to build a uniquely integrated and differentiated business model that will be competitive and hard to match," Adani told The Economic Times in an interview.

Also Read — ACC, Ambuja Cements rally after Holcim India deal

The acquisition will also help the company bridge the demand-supply gap for cement. "On the demand side, we continue to execute on a massive number of construction activities that span every one of our infrastructure businesses. I therefore expect us to be one of the largest customers of our own cement business," he added.

"Cement is not a material you can import. You have to be naturally Atmanirbhar."

The deal will also boost margins and return on capital employed for Ambuja and ACC owing to synergies with the integrated Adani infrastructure platform, especially in the areas of raw material, renewable power and logistics. The companies will also benefit from Adani’s focus on ESG, Circular Economy and Capital Management Philosophy.