Adani's Ambuja Cements Eyes Further Acquisitions
Ambuja Cements, part of the Adani Group, is ready to make more acquisitions to reach its production capacity of 140 million tonnes by 2028. Though it has made considerable acquisition lately, it is also eyeing organic as well as inorganic growth. The CFO, Vinod Bahety, recently pointed out to analysts on a post-earnings call that with a robust net worth of nearly Rs 60,000 crore and a debt-free balance sheet, Ambuja Cements has the financial strength to capitalize on expansion avenues.
"We have a strong balance sheet, with ample capacity for expansion", Bahety said, while underlining the company's financial position. Consolidated profit for the quarter ended September declined more than 50% year-on-year at Rs 473 crore. However, revenues from operations rose marginally 1.2% and reached an all-time high of Rs 7,516 crore. This revenue growth, however, lagged behind the growth in volume, as the company reported a 9% year-on-year increase in cement sales volumes, selling 14.2 million tonnes, which marked the highest September-quarter sales in five years.
Currently, Ambuja Cements is producing 89 million tonnes of cement per annum. The company aims to cross the 100 million-tonne mark by March 2025. By the end of the next fiscal year, the company will enhance its capacity to 118 million tonnes and then continue moving towards the ultimate target of 140 million tonnes in 2027-28. Ambuja Cements Chief Executive Officer Ajay Kapur also said that this acquisition-driven strategy of the company is going to further strengthen its position, since Ambuja will seize every acquisition opportunity that fits strategic goals.
We have acted fast on acquisition opportunities, a strategy that has contributed to our growth trajectory in the cement industry", Kapur told analysts. He pointed out that acquisitions over the past year are reflective of this commitment to fast-paced growth, recent buys including cement businesses of Sanghi Industries, Penna Cement, and Orient Cement.
Ambuja Cements had cash and cash equivalents of Rs 10,135 crore as on the end of the quarter ended September. That with a solid balance sheet leaves the company well positioned to achieve 'accelerated growth' going forward, Kapur said. "We are committed to getting to 140 million tonne. But it can be revised depending on future market dynamics", he added.
In addition to growth, focus areas for the company now include delivering cost efficiencies while remaining debt free and committed to high ESG standards. "We are fully committed to delivering on all fronts growth, efficiency, governance, and sustainability", Kapur concluded.
Expansion strategy: Acquired by Adani with a strategic direction and sound acquisition history, Ambuja's intent to more strongly position the company in India's competitive cement industry targets organic growth and new acquisitions as the opportunity arises.
