Aditya Udyal

Aditya Udyal

04-10-2022

12:31

Adani Group ๐Ÿ‘‰ The debt of the company adds up to an insane amount of 40% i.e. 2.26 trillion rupees. Even after which they went on and acquired Ambuja and ACC at $6.5 billion. Was the deal worth it?๐Ÿค” #Casestudy #adani #business #strategy

1. "You can't be in debt and win." - Dave Ramsey What a wonderful and correct quote isn't it. Well this quote doesn't apply to Adani Group. Thinking why๐Ÿค”. In this thread you will get to know every reason for why ๐Ÿค”๐Ÿค” . Read below๐Ÿ‘‡

2. Well before we move on to the answer of the above question a brief introduction to Holicm Group. The Holcim Group, legally known as Holcim Limited, is a Swiss multinational company that manufactures building materials. It has a presence in around 70 countries

3.And if it is as such, then why Holicm decided to leave India by selling it's two giant companies ? Now, the answer to this question is ENVIRONMENT FACTOR. Holcim's exit is part of the group's 'strategy 2025' that aims for sustainable solutions for the building materials sector.

4. As carbon industry alone adds 24% of the total global pollution so, they are putting more of their effort to produce/make a cement which releases very less or almost zero carbon while its production.

5. So on 16th May 2022 when bidding started Adani group bought and acquired major stake in Ambuja and ACC and as soon as this deal got finalized they became the 2nd largest cement maker .

6. You might also wonder if such a big company sold off it's position and has quit the market then why Adani group bought ACC and Ambuja. The most obvious reason for Adani's acquisition of these 2 companies is- a) Backward Integration b) Pradhan Mantri Awas Yojana

7. a) BACKWARD INTEGRATION: Simply put it is when a company purchases another company which supplies products or services required for it's production. You might also wonder that how can backward integration help. Well, for this you need to understand the below diagram carefully.

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10. As we all know Adani's are known to be builders and they have enormous business in construction and infra space. So, till now you might have got an insight of how back integration will benefit Adani group.

11. Also added, as they are taking huge projects where in they are building thousands of expressways, thousands of crores of ports , power plants and also they have residential and commercial properties up which requires a lot of cement and steel. They can control cost a lot.

12. b) Pradhan Mantri Awas Yojana In next few years as a part of Pradhan Mantri Awas Yojana we have 100 smart cities coming up , 200 airports, housing for all and all of these skyrocket the demand for cement and eventually benefit the cement industry of India.

13. Therefore using back integration along with government policies they are betting high on cement industry.

Now, finally the important lessons to take away are: 1) If debt is used properly it can be used to earn profits by analyzing the future markets. 2) Always try to have best consultants as they help you to catch opportunities which are big but might seem small at first.

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