The Adani Group, through its cement arm Ambuja Cement, is reportedly evaluating the acquisition of Star Cement, a leading player in the Northeast Indian market, as part of its ambitious expansion strategy. According to sources familiar with the matter, the group has appointed consultancy giant EY to assist in evaluating the deal.
While official responses from Adani Cement and Star Cement remain pending, a senior Adani Group official commented, “The company is always evaluating options for growth opportunities.” This development comes amidst heightened competition among major cement manufacturers, all of whom are eyeing the Northeast as a key region for growth and consolidation.
Cement Industry’s Northeast Focus
The Northeast region has emerged as a hotspot for the cement industry, with significant infrastructure projects driving demand. UltraTech Cement, for instance, is constructing a greenfield grinding unit in Assam with a capacity of 1.2 million tonnes per annum (MTPA), scheduled to commence operations by FY27. Similarly, JK Lakshmi Cement is establishing a clinkerisation unit (1 MTPA) and a grinding unit (1.5 MTPA) in the region, highlighting the growing interest of cement players in this market.
Star Cement, however, currently holds the largest market share in the Northeast. The company boasts a total installed capacity of 7.7 MTPA, including an integrated cement plant in Meghalaya (1.67 MTPA) and four grinding units. Star Cement has ambitious plans to expand its capacity to 25 MTPA by 2030, positioning itself as a formidable player in the region.
Star Cement: A Prime Acquisition Target
The promoters of Star Cement, Sajjan Bhajanka and Prem Kumar Bhajanka, hold 11.85% and 10.20% stakes, respectively, with total promoter shareholding at 66.47%. This robust shareholding and the company’s strong market presence make it an attractive acquisition target for Adani Group, which is seeking to solidify its position in the region.
During a recent analyst call, Star Cement’s management addressed the potential for industry consolidation in the Northeast. A senior executive highlighted unique challenges such as land acquisition, possession, local community dynamics, and the legal complexities surrounding mines. “Anyone who attempts to put up a plant will at least take four to five years,” the executive noted, underlining the strategic advantage of acquiring established players like Star Cement instead of setting up new plants.
The executive further observed, “Consolidation in other parts of the country has brought pricing discipline and profitability. The Northeast, however, presents a unique scenario that requires tailored approaches.”
Competitive Landscape
The Northeast is witnessing significant activity from other key players:
- Dalmia Cement: With an installed capacity of 5.6 MTPA in the region, Dalmia is set to commission additional capacity of 2.4 MTPA in Assam and 0.5 MTPA in Bihar by FY25.
- Amrit Cement: Operating with a capacity of 1.5 MTPA, Amrit Cement is another important player in the region.
The competition stems from a surge in infrastructure projects across sectors such as transportation, energy, digital connectivity, and industrial growth. These developments have driven cement manufacturers to strengthen their foothold in the Northeast, a region that has traditionally been underserved but is now poised for rapid growth.
Adani Group’s Expansion Strategy
The potential acquisition of Star Cement aligns with the Adani Group’s broader strategy of consolidating its position in the Indian cement market. Following its acquisition of Ambuja Cement and ACC, the group has aggressively pursued growth opportunities to rival industry leader UltraTech Cement.
Star Cement’s established presence and operational assets in the Northeast provide a ready platform for Adani Cement to expand its market share and capitalize on the region’s booming infrastructure demands.
Challenges and Opportunities
While the Northeast offers immense growth potential, the challenges flagged by Star Cement’s management highlight the complexities of operating in the region. Issues like land acquisition, legal compliance, and local stakeholder management are significant hurdles for new entrants. However, established players like Star Cement, with deep local knowledge and operational infrastructure, provide a strategic advantage for any acquirer.
The Adani Group’s interest in Star Cement signals the growing recognition of the Northeast as a vital market for India’s cement industry. As infrastructure development accelerates, the region is expected to play a pivotal role in shaping the future dynamics of the sector.
The Road Ahead
If the Adani Group proceeds with the acquisition of Star Cement, it could mark a significant milestone in the consolidation of the Indian cement industry. By leveraging Star Cement’s assets and market dominance in the Northeast, Adani Cement could strengthen its competitive position against industry giants like UltraTech Cement and Dalmia Cement.
As the region continues to attract infrastructure investments, the stakes are higher than ever for cement manufacturers vying for market leadership. Whether through acquisitions or organic growth, the Northeast is set to become a critical battleground for India’s top cement players.
The Adani Group’s next steps will be closely watched, as the outcome of this potential acquisition could reshape the competitive landscape of the Indian cement industry. For now, the Northeast stands as both a challenge and an opportunity for companies looking to cement their future in India’s evolving infrastructure story.