UltraTech Cement and Adani Cement alerted to Heidelberg's Indian divestment rumour

UltraTech Cement (Aditya Birla Group), and the country’s second-largest cement producer, Adani Cement, may join the race along with Parth Jindal-led JSW Cement to acquire Heidelberg Material’s Indian operations, reports The Hindu.

Heidelberg Materials has a cement manufacturing capacity of 13.4Mta across its Indian plants in Damoh (Madhya Pradesh), Yerraguntla (Andhra Pradesh), Sitapuram (Telangana), Ammasandra (Karnataka), Jhansi (Uttar Pradesh), Sholapur (Maharashtra), Chennai (Tamil Nadu), and Cochin (Kerala). Though JSW Cement has initiated unsolicited talks with the global building material company, Heidelberg’s India exit strategy would involve a detailed bidding process, said a source close to the development.

Moreover, the Indian subsidiary of Heidelberg Materials is a listed entity, and it has to follow the due process laid out by SEBI for protecting investor interests, the source added. 

Operational difficulties
Foreign-owned cement companies are increasingly finding it difficult to operate in India, the world’s second-largest market, due to increasing competition and their compulsion to spend heavily on decarbonisation projects.

Kumar Mangalam Birla-led UltraTech plans to enhance capacity to 200Mta from 138Mta. The company has doubled its grey cement production capacity from 66.3Mta in FY15-16 to 132.4Mta in FY22-23. Work has already commenced on the next growth phase of 22.6Mta additional capacity with an investment of INR130,000m.

Billionaire Gautam Adani-led Adani Cement is the second-largest cement producer in India having acquired both Ambuja and ACC Ltd’s 73Mta of capacity and plans to take it up to 140Mta by FY27-28. The debt-free companies generate revenue of INR400,000m(US$4805.1m) and expect sales to grow 18-20 per cent annually.