Adani Group bolsters investment in Ambuja Cements; makes metal industry debut with copper smelter

In a flurry of strategic moves, the Adani Group showcased its financial muscle and diversified its portfolio. Industry observers were abuzz as the conglomerate infused a staggering Rs 6,661 crore into Ambuja Cements while simultaneously marking its foray into the metal industry with the debut of Kutch Copper.

The Adani Family, in a partial exercise of earlier issued convertible warrants, announced the infusion of an additional Rs 6,661 crore into Ambuja Cements, solidifying its position within the company. This infusion elevates the family's stake in Ambuja Cements to an imposing 66.7 per cent. The company said the move underscored the family’s commitment to bolster the prospects and potential of the cement vertical, signalling confidence in its growth trajectory.

In a separate announcement, Kutch Copper, a subsidiary of Adani Enterprises, unveiled its maiden venture into the metal industry with the commissioning of its greenfield copper refinery project at Mundra. The dispatch of the first batch of cathodes to customers marked a significant milestone for the Adani Group.

The investment, totalling nearly $1.2 billion, aims to establish a state-of-the-art copper smelter with a capacity of 0.5 MTPA in the initial phase, positioning Kutch Copper as a leader in the global market. Upon completion of the second phase, the company anticipates becoming the world's largest single-location custom smelter with 1 MTPA capacity.

In the cement business, the Adani Group's journey into Ambuja Cements traces back to its acquisition of Holcim's Ambuja Cements and interests in ACC Ltd. in September 2022. Following the acquisition, Ambuja Cements issued convertible warrants to Harmonia Trade and Investment Limited, a part of the Adani Family, with the Adani Family having already infused approximately Rs 5,000 crore upfront in 2022.

Ambuja Cements said the infusion of funds into provides the company with capital flexibility for accelerated growth, capital management initiatives, and enhanced balance sheet strength. The move aligns with expansion plans to ramp up its cement portfolio capacity to 140 million tonnes per annum (MTPA) by 2028, up from the current 77.4 MTPA.

On the metals front, Kutch Copper is set to diversify its offerings with the establishment of Kutch Copper Tubes Limited as part of its forward integration strategy. The addition of copper tubes to its portfolio will cater to applications in air conditioning and refrigeration, expanding the company's market reach.

The company claimed this venture would create 7000 jobs. The surge in copper demand is propelled by burgeoning sectors like renewable energy, electric vehicles, charging infrastructure, and the expansion of power transmission and distribution networks.

This demand surge, however, not only underscores the growth potential of these sectors but also serves as a strategic entry point for the Adani Group, granting them privileged access to these lucrative markets. Critics argue that while these sectors hold immense potential for societal and environmental progress, the Adani Group's entry into the domain raises concerns about undue sectoral influence and business remaining in the hands of a select few.

Observers anticipate significant imports of copper concentrate through the Adani-owned Mundra port, with projections indicating up to 1 million tons in the first year of operation for the Adani smelter. This development underscores the Adani Group's growing influence and strategic positioning in key sectors of the Indian economy.

As the conglomerate aggressively expands into the cement and metal industries, questions arise about the level playing field in these sectors. With apparent government support and favourable policies, the group enjoys a significant advantage, potentially distorting competition and undermining the interests of smaller players.

Critics argue that such privileged treatment could result in monopolistic tendencies, ultimately reshaping these sectors in favour of Adani Group's interests rather than fostering fair market dynamics.