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India Cements and Nuvoco Vistas could be the Adani Group’s next acquisitions following concrete progress in the cement industry.
With the signing of an agreement for the Adani Group to buy Ambuja-ACC, Gautam Adani’s intention to take an important step in the cement industry is clear.
The panel of Ambuja Cements approved the investment of Rs 20,000 crore in the firm through the allocation of preferential warrants, which is a more interesting statement. Industry watchers can see that the goal is to buy more cement assets, especially smaller ones whose current cost structure and market share may be under threat.
Largest cement company in Eastern India and fifth largest cement business in India in terms of capacity Building materials supplier Nuvoco Vistas Corporation Limited (Nuvoco) strives to be a “Building Materials Company Delivering Superior Performance” and has a mission to create a safer, smarter and sustainable world.
Nuvoco is a member of the Nirma Group, India’s largest corporate conglomerate, which entered the cement industry in 2014 by opening a new cement plant in Nimbol, Rajasthan. After that, the company will expand through the purchase 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 Eastern India; Rajasthan; and Haryana in North India. In Bhiwani and Chittorgarh, captive power plants (CPP), waste heat recovery (WHR) systems, and solar power plants are all included in the integrated plant.
The leading ready-mix concrete supplier Nuvoco provides effective concrete solutions to improve the quality of buildings and is the best partner for many developers, small contractors, builders, architects, government bodies, people, and other institutions.
Mumbai is home to Nuvoco’s dedicated NABL Accredited Construction and Innovation Development Center (CDIC). It can conduct more than 100 mechanical tests and become a center for the incubation of creative ideas. In addition, it provides third-party external testing services and sells goods and services that have passed the most stringent tests and received widespread approval.
With 120 million tons 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 is distinguished by its lack of aggression, either to build its own capacity or to buy any assets. That could change under the Adani Group, its new owner, which plans to invest further capital.
Mahesh Singhi, the founder and managing director of Singhi Advisors, an M & A consultancy business, believes that this sends a clear statement that the community is prepared with a war chest for other acquisitions in the cement sector.
He said the estimated infusion of Rs 20,000 crore was only equity to explain the problem. ” With a debt-equity ratio of 1:2, they can easily have an amount of Rs 60,000 crore accessible. When you have that kind of money, you have a lot of options.”
The Adani Group, which has operations in logistics, power, and ports and is currently strengthening the entire infrastructure of wheels and cement, according to industry analysts, is well positioned. A domestic brokerage worker and long-time observer from the cement sector claims that “they now have the opportunity to offer integrated benefits and offerings that can be done in a cost-efficient manner.”
He believes the group should now consider smaller competitors such as Nuvoco Vistas (25 mtpa capacity), 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 plant with a capacity of 1 mtpa costs between Rs. 700 and Rs. 800 billion in capital expenditure, while the grinding facility will cost between Rs. 200 and Rs. 250 billion. Naturally, buying existing assets costs more money, but Adani’s company immediately gains access to the market and brand.
According to Singhi, the Adani group has made it clear that its goal is to increase cement production capacity. Given the length of time required 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 KR Choksey Securities, may see a shift from just construction to a wider selection in building supplies. “This includes pre-construction slabs, and there is great potential if the government invests significantly in infrastructure. Without question, the acquisition 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 main businesses – cement, ready-mix concrete (RMX), and modern building materials (MBM) – can easily meet the needs of private builders and institutional infrastructure construction.
Cement
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 the best in the market. Beton, Duraguard, DoubleBull, PSC, Nirmax, and Infracem are some of the Nuvoco brands that deliver a wide range of goods.
Pre-Mixed Concrete (RMX)
Ready-Mix Concrete (RMX) solutions from Nuvoco are suitable for a range of tasks, including commercial concrete supply and onsite delivery of ready-mix concrete for single home builders.
Beton (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 currently operates more than 50 RMX factories across India, and is thrilled to have contributed to important projects like Lodha World One, Amritsar Entry Gate, and Metros (Delhi, Jaipur, Noida, and Mumbai).
Modern Construction Materials (MBM)
For Nuvoco, the items sold under the Modern Building Materials brand represent an important differentiator. It consists of several items, such as wall putty, tile adhesive, ready-mixed dry plaster, covering blocks, and multifunctional bonding and waterproofing chemicals. Zero M and InstaMix are the usual brands that market and sell these items.
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