India Cements and Nuvoco Vistas may be the Adani Group’s next purchases after concrete progress in the cement industry.
With the signing of the agreement for the Adani Group to purchase Ambuja-ACC, Gautam Adani’s intention to make an important move in the cement industry is clear.
The panel of Ambuja Cements approved an investment of Rs 20,000 crore into the firm through a preferential warrant allocation, which was the more fascinating statement. Industry observers can see that the goal is to buy more cement assets, especially the smaller ones whose cost structures and market shares may now be under threat.
The largest cement company in East India and the fifth-largest cement business in India in terms of capacity Building materials provider Nuvoco Vistas Corporation Limited (Nuvoco) strives to be a “Leading Building Materials Company Delivering Superior Performance” and has a mission to create a safer, smarter and more sustainable world.
Nuvoco is a member of Nirma Group, the largest corporate conglomerate in India, which entered the cement industry in 2014 by opening a brand-new cement plant in Nimbol, Rajasthan. After that, the company will expand through the purchases of NU Vista Limited (formerly Emami Cement Limited) in 2020 and Lafarge India Limited in 2016.
Nuvoco’s growth trajectory is unique to the country. It has doubled its established capacity over the past five years as it scaled up its capacity over time, making it the fastest-growing cement company with a total of 23.82 MMTPA. (Source: Report from CRISIL)
To effectively meet customer demand, Nuvoco currently serves 11 cement facilities, including five integrated units, five grinding units, and one blending unit, in the states of West Bengal, Bihar, Odisha, Chhattisgarh, and Jharkhand in East India; Rajasthan; and Haryana in North India. At Bhiwani and Chittorgarh, captive power plants (CPP), waste heat recovery (WHR) systems, and solar power plants are all included in the integrated plants.
Leading ready-mix concrete provider Nuvoco provides effective concrete solutions to raise building quality and is the best partner for many developers, small contractors, builders, architects, governmental entities, people, and other institutions.
Mumbai is home to Nuvoco’s dedicated NABL-accredited Construction Development and Innovation Center (CDIC). It can perform more than 100 mechanical tests and acts as a centre for the incubation of creative ideas. Additionally, it provides third-party external testing services and sells goods and services that have passed the strictest tests and received widespread approval.
With 120 million tonnes produced annually (mtpa), UltraTech continues to be in the lead, followed by the Ambuja-ACC combination, which produces 67 mtpa. Under the ownership of the Swiss multinational Holcim, the latter’s strategy in India was for a time distinguished by a lack of aggression, either to build capacity on its own or to buy any assets. That may alter under the Adani Group, its new owner, who plans to invest further capital.
Mahesh Singhi, founder and managing director of Singhi Advisors, an M&A consultancy business, argues that this sends a clear statement that the community is prepared with a war chest for other acquisitions in the cement sector.
He argues that the expected infusion of Rs 20,000 crore is only equity to further explain the issue. ” With a debt-equity ratio of 1:2, they might easily have a total amount of Rs 60,000 crore accessible. When you have that kind of money, you have a wide range of options”.
The Adani Group, which has operations in logistics, power, and ports and is now reinforcing the entire infrastructure play with cement, according to analysts following the industry, is well-positioned. One domestic brokerage employee and long-time observer of the cement sector claims that “they now have the opportunity to offer integrated benefits offering and that can be done in a cost-efficient manner.”
He believes that the group should now think of smaller competitors like Nuvoco Vistas (capacity of 25 mtpa), India Cements (15 mtpa), and Sanghi Cement (6 mtpa). Smaller competitors will eventually struggle to compete with the cost structures of industry titans like UltraTech and Ambuja-ACC.
A greenfield cement factory with a 1 mtpa capacity will cost between Rs. 700 and Rs. 800 billion in capital expenditures, while a grinding facility will cost between Rs. 200 and Rs. 250 billion. Naturally, buying an existing asset will cost more money, but the Adani company gains access to a market and a brand right away.
According to Singhi, the Adani group has made it plain that the goal is to increase cement production capacity. Given the length of time needed to complete a greenfield cement project in India, he believes that inorganic development is the best course of action.
The strategy, according to Deven Choksey, MD of K R Choksey Securities, might have looked at the shift from merely construction to a wider option in building supplies. “This includes pre-construction slabs, and there is a substantial possibility given the government’s significant investment in infrastructure. Without a question, acquisitions will be the best method for the Adani Group to expand its cement business.
With a portfolio of more than 50 products, Nuvoco’s three key businesses—cement, ready-mix concrete (RMX), and modern building materials (MBM)—can easily meet the needs of both private house builders and institutional infrastructure development.
Based on BIS standards and premium raw material quality, Nuvoco’s cement portfolio includes Ordinary Portland Cement (OPC), Portland Slag Cement (PSC), Portland Pozzolana Cement (PPC), and Portland Composite Cement (PCC), which are among the best in the market. Concrete, Duraguard, DoubleBull, PSC, Nirmax, and Infracem are just a few of Nuvoco’s many brands that deliver a wide variety of goods.
Pre-Mixed Concrete (RMX)
The Ready-Mix Concrete (RMX) solutions from Nuvoco are appropriate for a range of tasks, including the provision of commercial concrete and the onsite delivery of ready-mix concrete for lone home builders.
Concrete (performance concrete), Artiste (decorative concrete), InstaMix (ready-to-use premix concrete), X-Con (expert concrete), and Ecodure are among the RMX products offered by the company (Special green concrete). The company is currently performing more than 50 RMX plants throughout India, and it is thrilled to have contributed to important projects like Lodha World One, the Amritsar Entry Gate, and the Metros (Delhi, Jaipur, Noida, and Mumbai).
Modern Construction Materials (MBM)
For Nuvoco, the items sold under the Modern Building Materials brand represent a crucial difference. It consists of several items, such as wall putty, tile adhesive, ready-mix dry plaster, cover blocks, and multifunctional bonding and waterproofing chemicals. Zero M and InstaMix are the brands that are used to market and sell these goods.