LafargeHolcim-controlled Ambuja Cement is looking to acquire capacities in ready-mix concrete (RMC) and aggregates businesses to fuel growth.
The company is also on the lookout for adding cement capacities, if the valuations serve right. “The company continues to look at all growth options in cement and other building materials segments like ready-mix concrete (RMC) and aggregates,” a company official told Business Standard last week. The official added, “Inorganic growth in cement business depends on value-accretive options.” Ambuja Cements was one of the firms which had bid for Binani Cement last year, but lost out to UltraTech over a higher valuation.
Analysts see the move as an attempt to move towards being a building materials company and not a pure cement maker.
“Globally, cement giants have looked at developing a building materials image besides that of a cement maker. The focus for Ambuja looks to be on similar lines,” said Nitin Bhasin, head of research — institutional equities — at Ambit Capital. RMC has been a significant revenue and profit generator for ACC, which is now a subsidiary of Ambuja Cement.
In its 2018 annual report, ACC said, “The RMC business has consistently been performing well. RMC sales volume and earnings before interest taxation depreciation and amortisation or Ebitda rose 16 per cent in 2018 compared to the previous year. During the year, the RMC business expanded its footprint by adding 18 plants.”
In addition to inorganic opportunities, Ambuja is also adding 4.6 MTPA cement volumes from a greenfield integrated cement plant at Marwar Mundwa in Rajasthan.
Its subsidiary ACC plans a greenfield integrated cement plant at Ametha, in Madhya Pradesh, with clinker capacity of 3 MTPA and cement capacity of 1 MTPA. There is also a brownfield expansion of 1.6 MTPA at Tikaria, Uttar Pradesh, a third grinding unit of 2.2 MTPA cement capacity in Uttar Pradesh and a 1.1 MTPA cement grinding facility at the existing location at Sindri, Jharkhand.