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[Global Times Pakistan correspondent Yao Xiao] As Indian Prime Minister Narendra Modi continues to increase infrastructure investment, India's former richest man Gautam Adani has recently launched a series of acquisition and expansion measures in the cement production sector to further seize market share. This has triggered a counterattack from UltraTech, India's largest cement manufacturer.

Indian Prime Minister Modi file photo Source: Visual China

Since 2022, Adani's group has begun to invest in the cement industry. According to India's Mint, the group acquired 89 million tons of cement production capacity overnight at a high price of US$6.6 billion through mergers and acquisitions, becoming India's second largest cement manufacturer. In June this year, Adani Group announced the acquisition of Penna, the largest cement manufacturer in southern India, to enter the southern Indian cement market. The group also expressed its expectation to increase its market share to more than 20% by 2027.

Adani Group's move has alerted UltraTech, India's largest cement manufacturer. According to a report by market analysis agency Trade Brains, the company's current annual cement production capacity is 145 million tons, accounting for 33% of India's total national production capacity. While Adani Group is making large-scale acquisitions, UltraTech has also begun defensive equity acquisitions. In June this year, UltraTech spent US$698 million to acquire 55% of the shares of India Cement Co., Ltd. in batches. The company is also located in southern India and is an important cement production company in Tamil Nadu. At the same time, UltraTech proposed that it hopes to increase its annual cement production capacity to 200 million tons around 2027.

UltraTech belongs to the famous Birla family in India, which rose to prominence in the late 19th century. In 1995, Kumar Mangalam Birla, who was only 28 years old, became the family heir. After taking over the business, he identified telecommunications and cement as the main development directions of the enterprise and achieved remarkable success.

Compared with the "old money" families like Birla, Adani is a "new rich". He and Modi are both from Gujarat, India. When Modi was the chief minister of Gujarat, Adani Group carried out a lot of infrastructure construction in the local area, becoming an important promoter of Modi's "Gujarat economic development model". After Modi became prime minister, Adani Group continued to win government infrastructure investment bids.

The Times of India reported that after the 2024 Indian general election, Modi announced that he would further expand infrastructure construction. In the budget submitted by the new government on July 23, infrastructure investment was placed in a prominent position. New Delhi investor Avik Mitra said that the Indian government's investment plan in infrastructure is the key reason for the large-scale merger and reshuffle in the cement industry.

There are hundreds of cement manufacturers in India, but half of the total production capacity is controlled by UltraTech and Adani Group. Currently, many small and medium-sized cement manufacturers have received acquisition offers from the two companies.

Financial analyst Gupta believes that this "cement battle" also has hidden concerns. On the one hand, as the competition between the two companies becomes more intense, it is likely to trigger antitrust review. On the other hand, Modi's current term in office faces a "lame duck" challenge. The two companies bet on infrastructure development through large loans, but the risk of changes in India's national policies in the medium and long term cannot be ignored.