India’s Ambuja Cements said it will pursue future capacity additions more gradually as it focuses on improving utilisation rates across its existing operations. The Adani Group-owned producer said it remains on track to increase cement capacity to 119 million tonnes per annum by the end of the current fiscal year, up from 109 million tonnes per annum in fiscal year 2025-26. However, Chief Executive Officer Vinod Bahety said the company’s immediate priority is stabilising newly commissioned plants and improving operational efficiency before launching further large-scale expansion. The shift signals a recalibration in cement industry growth strategy after an aggressive acquisition-led phase.
Ambuja achieved approximately 70 per cent capacity utilisation in fiscal year 2025-26. The company entered a rapid expansion phase following Adani Group’s acquisition of Ambuja Cements and ACC in 2022. Since then, the group has expanded through acquisitions including Sanghi Cement, Penna Cement Industries and Orient Cement, alongside organic growth projects. The focus on utilisation reflects a broader trend among material producers to optimize construction supply chains and reduce capital intensity before committing to new plants. Stabilising recent additions will be critical for meeting demand from infrastructure, housing, and commercial real estate projects across India.
Although Adani Cement reported record revenue and profit after tax in fiscal year 2025-26, earnings before interest, taxes, depreciation and amortization and EBITDA margin declined year-on-year, with margin falling to 18 per cent from 23 per cent in fiscal year 2025-26. The margin compression underscores why operational efficiency is now the priority over volume growth. Higher energy costs, logistics, and integration of acquired assets have weighed on profitability despite topline gains. For developers and contractors, the utilisation push could improve regional cement availability and price stability as plants run closer to design capacity. More on the group’s portfolio is available via Adani Group.
Post-Acquisition Consolidation Phase
The decision to moderate expansion comes after Adani Cement consolidated its position as one of India’s largest producers through inorganic growth. The Sanghi, Penna, and Orient acquisitions added significant clinker and grinding capacity in key markets including Gujarat, Andhra Pradesh, and Telangana. Organic projects commissioned over the last 24 months further expanded the footprint. With 119 million tonnes per annum targeted by fiscal year end, the company will pause major new announcements to focus on plant debottlenecking, logistics optimization, and power consumption metrics. This approach aligns with sustainable capital deployment in infrastructure materials as demand cycles normalize.
Industry analysts note that a 70 per cent utilisation rate leaves headroom for output growth without new capex, provided kiln reliability and raw material sourcing improve. Vinod Bahety’s emphasis on stabilising newly commissioned plants suggests that integration timelines for recent acquisitions remain active. The company’s strategy may influence peers to reassess their own expansion roadmaps amid input cost volatility and evolving environmental norms. For large-scale real estate and public works, higher utilisation at existing sites can shorten lead times and reduce freight costs compared to greenfield plants. The move also reflects Adani Group’s broader portfolio discipline after rapid scaling across energy, transport, and building materials.
The near-term outlook for Ambuja hinges on lifting operating rates while protecting margins. Key levers include alternative fuels, waste heat recovery, and rail-linked dispatch to cut variable costs. If utilisation rises toward 80 to 85 per cent, the company could add significant volumes without proportional investment, improving return on capital employed. For the built environment sector, a stable cement supply base supports project planning for housing, industrial parks, and urban infrastructure. The moderation in expansion does not alter the long-term capacity goal but re-sequences it to follow performance benchmarks. As India’s construction demand grows, producers balancing scale with efficiency will shape cost structures for real estate development through 2030.
Image Courtesy: Cemnet
