After conquering ports and airports, Gautam Adani sets sights on cement sector

MUMBAI: After capturing a lion’s share of the market in the country’s ports and airport businesses, India’s second richest man Gautam Adani has now set his sights on the country’s cement sector.

The Adani Group’s flagship company

, on Saturday, informed the bourses that it has incorporated a new wholly-owned subsidiary Adani Cement Industries with an authorized share capital of Rs 10 lakh and paid-up capital of Rs 5 lakh.

The newly incorporated company has no turnover to boast of and will be headquartered in Gujarat, Adani Enterprises said in a regulatory filing.

The move is likely to cause some perspiration in the cement sector as it will further intensify the competitiveness of a space that is expected to do well in the years ahead.

Analysts are bullish on the cement space as they see it as a proxy for the revival of capital expenditure in the country once the Covid-19 related shock has dissipated.

“I would prefer cement over metals. It is a pure domestic sector where there is no policy challenge from elsewhere. It depends completely on India’s own demand situation,” Ridham Desai, managing director at Morgan Stanley, told ETNow recently.

Desai believes that the sector could see a breakout in terms of volumes in the coming two years, which in the presence of limited capacity addition, could help companies enjoy pricing power. “So that (cement) could be a more exciting sector than metals,” Desai said.

Adani’s bet on the cement sector is also a vote of confidence on the country’s infrastructure space, which after years of chronic underinvestment and bad loan crisis, is expected to emerge stronger post the ongoing pandemic.

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This is not the first new venture for the billionaire. Earlier this year, Adani Enterprises incorporated a new business Adani Copper to take advantage of the global boom in copper demand post the re-opening of economies across the world.

How Adani will go about building the cement company remains to be seen, but past experience suggests that Adani Cement could adopt an aggressive acquisition strategy that has seen it control large shares of India’s port and airport business recently.

Gautam Adani has mastered the art of taking advantage of distressed valuation of performing assets in the pandemic era, a skill that has seen his personal wealth rise over $43 billion in the first six months of 2021, the fastest rise for any individual in the world, according to the Bloomberg Billionaires’ Index.

On Friday, shares of Adani Enterprises ended 0.7 per cent lower at Rs 1,601 on the NSE.



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