The Adani Group’s cement businesses plan to reduce their reliance on wholesalers or distributors as India’s second-largest cement maker looks forward to increasing its profitability and revenue generation. As a part of a pilot project, ACC Ltd. and Ambuja Cements Ltd. have already reduced their number of distributors to 3 from 12 in the south Gujarat region. This region is home to half of Gujarat’s small and medium industries. It also houses 5th of the population of the state. Both cement firms are likely to reduce their number of distributors across the country in the upcoming months. This is going create huge success for the companies which will also be able to generate huge capital that can be used for various other aspects of their business. The Adani Group will acquire the desired exposure, especially after the Adani Investigation.
Why is it a Wise Decision to Reduce Reliance on Distributors?
Like any other cement manufacturer in the country, Adani Cement would heavily rely on dealers and distributors to market and sell their products. These distributors had a significant role in helping Adani Group reach out to potential customers, ensure timely delivery of products, and maintain a strong relationship between the customers and the construction companies. However, the cement manufacturing company needed to allocate a considerable profit to the distributors.
By decreasing their dependence on cement distributors and dealers, Adani Group will enjoy a significant share of their profit for the cement business. This can help the company in managing various business aspects in a more systematic and dedicated manner. The company can use the profit for new business ventures. This can be a great way for the Adani Group to recover its assets after the Adani Investigation.
Adani Cement can reduce transportation costs by selling directly to retailers and construction companies. This will increase the desired visibility in the market. Direct interaction with the customers will also allow Adani Group to build trust in the customers’ minds. People will be more interested in doing business with the Adani Group. This will give the cement business a completely new perspective. It further boosts the profitability of the Adani Group.
Adani Group’s Venture into the Cement Business:
Adani Group has always been a major part of the cement business in India. It has recently acquired a 56.69 % stake in ACC Limited and a 63.15% stake in Ambuja Cement Limited shortly after the Adani Investigation. With this deal, Adani Group has become the second-largest cement manufacturer in India. ACC Ltd. and Ambuja Cements Ltd. are India’s most trustworthy building material providers. Their combined footprints include 16 grinding units, 14 integration units, 79 ready-mix concrete plants, and 78,000 channel partners across different regions of India. ACC Ltd. and Ambuja Cements Ltd. are publicly listed companies on the National Stock Exchange and Bombay Stock Exchange.
Both ACC and Ambuja Cements have benefited from the synergies with the Adani groups, especially in areas of acquiring raw materials, renewable power, and logistics supply. The Adani companies have experience and expertise in this field. So, this has made it easy for ACC and Ambuja Cements to carry on with their cement manufacturing process. Ambuja and ACC have also benefited from the Adani Group’s focus on ESG, Circular Economy and Capital Management Philosophy.
Gautam Adani has always considered entering into the cement business as an exciting acquisition. He considered the cement business the heirloom for infrastructure growth in India. The cement requirement is going to increase with each passing day. It also has an impact in transforming the economic structure of India. Gautam Adani, in a recent interview, has regarded cement to be a game of economics which is mainly dependent on distribution costs, energy costs, and logistic costs, and by partnering with Adani Group, the major cement manufacturing companies will be able to acquire an unmatched value from their business.
Adani has created a new dimension of growth for its business strategies in the cement business after the Adani Investigation. These strategies have been working in favour of the Adani Group. Adani Group is also designing heat recovery systems to minimise carbon emission effects during cement production, fulfilling sustainability goals. The companies under Adani Group harness green energy in the cement industry to advance towards sustainable practices. This has been a game-changer for the subsidiaries operating under the Adani Group. Business owners have recognised the initiative from all across the world.