India is the second-largest cement producer in the world but accounts for about 7% of the global installed capacity. India’s overall cement production capacity was nearly 545 million tonnes (MT) in FY22. Total cement production was about 262 million tonnes (MT) in FY21 (till February 2021).

As per ICRA, in FY22, the cement production in India may increase by 12%, driven by rural housing demand and the government’s strong focus on infrastructure development.

India is also the world's second-largest cement market, though it has less than half of the global average per capita cement consumption at about just 240 kg per capita, as compared to the global average of 525 kg per capita. Against this, China has a per capita cement consumption of over 1,600 kg.

"Our move into the cement business is a validation of our belief in our nation's growth story and our capabilities. The drivers for this decision have been based on two primary factors. The demand-supply gap, and the synergies with our existing businesses," says Adani.

Cement is fundamentally a game of supply chain and energy efficiency, and therefore "our natural adjacencies look highly attractive to us", Adani reasons for this foray into cement.

Growth of the middle class, the government’s focus on infrastructure like 100 smart cities, 200 new airports, housing for all as part of the Pradhan Mantri Awas Yojana, large-scale concrete highways and the ministry's mandate that stipulates a minimum of 25% of concrete volume to be used in national highways, expressways and other centrally-sponsored road projects, etc., is going to drive cement consumption, says Gautam Adani.

He says the group's expertise in related fields and green energy will help reduce the carbon footprint of cement manufacturing. "A core part of the Adani Group’s capability revolves around its expertise in energy management, including heat recovery. Therefore, when combined with the learnings we will get from the sustainability practices that ACC and Ambuja Cement have adopted, I am very confident that we will become the greenest cement company in the world," he says.

rural housing demand

Cement battle to intensify as Adani, Birla plan capacity expansion