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Adani Enterprises incorporates new subsidiary for cement sector

Adani Cement Industries Ltd will carry on business as a manufacturer, producer and processor of all types of cement
Representational image.
Representational image.
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Our Special Correspondent   |   Mumbai   |   Published 13.06.21, 01:09 AM

After making his presence felt in the airports and ports businesses, Gautam Adani is now set to enter the country’s cement sector. The group’s flagship company Adani Enterprises Ltd (AEL) on Saturday announced that it has floated a subsidiary to manufacture and process all types of cement.

AEL said it has incorporated the new subsidiary — Adani Cement Industries Ltd (ACIL) — with an authorised share capital of Rs 10 lakh. It was registered with the Registrar of Companies, Ahmedabad, on June 11 and it is yet to begin business operations. AEL added that the new subsidiary will carry on business as a manufacturer, producer and processor of all types of cement.

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Gautam Adani’s foray into the sector comes at a time analysts are positive about the sector’s prospects given the government’s focus on infrastructure and attractive interest rates which are expected to help the real estate segment.

Though the second Covid wave affected demand, a strong recovery is projected even during the monsoon season which is usually lean for the industry.

Adani, who is the second richest Indian after Mukesh Ambani, is present in businesses such as edible oils, mining services, logistics, roads and renewable energy. It is now the largest private operator of airports in India with assets in Ahmedabad, Lucknow, Mangalore, Jaipur, Guwahati and Thiruvananthapuram and the Mumbai International Airport under its belt. It has also ventured into the redevelopment of railway stations.

The cement entity would be pitted against UltraTech Cement, Shree Cement, Ambuja Cement, Nirma, ACC and Dalmia Bharat.

“We believe India’s cement industry is entering a new upcycle that has no parallel in recent decades. We expect the next few years to be characterised by moderate volume growth (7 per cent CAGR over FY20-26E) and price increases (2.5 per cent). The Indian cement sector is back in the limelight, thanks to significant boost to infrastructure spending in the Union budget, the ongoing real estate revival, aided by low interest rates  and continued government focus on the affordable housing segment,” analysts at Emkay said in a recent note.

Analysts at Edelweiss, too, are optimistic about the industry’s fortunes. As the second Covid wave recedes, there will be a recovery even in a seasonally weak monsoon month, they said.



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