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India's <keyword id="20884491" type="General" weightage="20" keywordseo="cement-industry" source="keywords">cement industry</keyword> is heating up faster than a kiln! If one’s tracking the sector, the war-like situation between the existing and emerging cement giants is pretty evident. For the uninitiated, Aditya Birla Group-backed <keyword id="19963567" type="General" weightage="100" keywordseo="Ultratech-Cement" source="keywords" meta.keywordsubtype="org" meta.entityname="Ultratech Cement" meta.hostid="261" meta.entityid="Ultratech Cement">Ultratech Cement</keyword> and <keyword id="19955648" type="General" weightage="20" keywordseo="Adani-Group" source="keywords">Adani Group</keyword> have been at loggerheads for increased market share in recent years. And now, JSW Cement also seems to be gearing up to challenge the potential duopoly.<br /><br />As conglomerates aggressively acquire smaller players to achieve market domination, the cement industry in India right now resembles an eighteenth-century battlefield. The battle has significantly escalated this year, but this trend of acquiring regional cement companies can be traced back to 2018 when Ultratech acquired Binani Cement.<br /><br />Since then, both Adani Group and Birla Group have been capturing checkposts all over India, one by one. Ultratech acquired Binani Cement to strengthen its base in the western region and this week, India Cement, for the southern states. Adani has also acquired the Hyderabad-based Penna Cement this year, after acquiring majority stakes in Ambuja Cements and ACC in 2022. <br /><br />But why the obsession with cement?<br /><br /><h2>Why are the Titans clashing for…cement?</h2>India's infrastructure boom is in full swing, and whoever controls the cement supply holds the key to this construction kingdom. Adani Group has been known to follow an acquire &amp; dominate strategy for capturing market segments. <keyword id="19907441" type="General" weightage="20" keywordseo="Aditya-Birla-Group" source="keywords">Aditya Birla Group</keyword>, however, has dominated the cement industry in India through Ultratech for a while now. <br /><br />The answer to the above question may simply lie in establishing the leadership moat for themselves. With even-growing public and private spending on infrastructure, both players want to capture the majority share to dominate the supplies of cement, which is essential for construction.<br /><br /><h2>Where is the sector heading?</h2>While both Adani and Aditya Birla groups have locked horns to acquire CK Birla’s Orient Cement for a while now, a new hurdle threatens their dominance. As per an Economic Times report, Sajjan Jindal-led JSW Cement has now started to evaluate the acquisition of the promoter stake in Orient Cement. <br /><br />As an emerging front, JSW Cement also aims to reach 50 MT per annum by 2030. However, two other major players, Shree Cement and Dalmia Bharat, already have 53 MTPA and 43 MTPA capacity.<br /><br /><div type="image" title="Birla Vs Adani" msid="112196675" hostid="261" sizebytes="284160" caption="&amp;lt;p&amp;gt;Look back at major acquisitions in the cement sector&amp;lt;/p&amp;gt;"></div><br />However, with over a dozen acquisitions over the last decade, both Ultratech and Adani Group are by far the largest players in the sector eyeing over 200 MT per annum by 2030.<br /><br /><h2>What about the prices?</h2>Will consumers benefit from this cutthroat competition to industry domination? In the short term at least, yes! While lower prices might sound appealing, it's essential to keep an eye on quality as consolidation in the manufacturing sector is always tricky. We don't want to end up with buildings crumbling like cookies.<br /><br />And let's not forget about the little guys. This consolidation of power into a few mega-corporations could squeeze out smaller players, reducing competition and potentially leading to higher prices in the long run.<br /><br /><em><h2>I think I’ve seen this film before….</h2></em>The current atmosphere of the cement industry feels reminiscent of what happened in the telecom industry in India in 2016 i.e. the infamous tussle of tariffs. As Reliance Industries launched Jio, it disrupted the entire segment and forced other telecom companies to compete on their terms. As a result, the tariffs fell sharply, companies shut and brands merged, but Jio still claims 40% of the market share in India in terms of subscriber count. <br /><br />Moreover, experts feel that the change in power dynamics in both these industries, cement and telecom, have direct ties to the current government’s industrial policy. Government policies seem to favour companies that have acquired a dominant position in distinct sectors of the economy, which in India’s case are led by two of the richest men in Asia — Gautam Adani and Mukesh Ambani. This strategy of adopting ‘<keyword id="1327299" type="General" weightage="20" keywordseo="national-champions" source="Orion">National Champions</keyword>’ is seemingly inspired by South Korea’s <em><keyword id="4933297" type="General" weightage="20" keywordseo="Chaebols" source="Orion">Chaebols</keyword></em> and Japan’s <em>Zaibatsu</em> conglomerates that came into existence decades ago.<br /><br /><h2>From corporate drama to k-drama: Chaebols</h2>The term <em>Chaebol</em> might ring a bell if you've watched K-dramas. They are family-owned business conglomerates in South Korea. This business structure originated in the 1960s and got so popular that it made its way into Korean pop culture. While chaebols have fueled the rapid growth of the Korean economy, concerns about their opaque governance and controlling shareholder interests often deter external investors.<br /><br />Japan’s <em>zaibatsu </em>were also similar financial and industrial conglomerates that were major forces in Japan during World War II. Korea’s Hyundai and Japan’s Mitsubishi are some prime examples of this structure.<br /><br /><h2>Growth of the Goliaths</h2>Viral Acharya, the former Deputy Governor of the RBI, highlights the decade-old trend of the central government achieving economic growth outcomes by working with large conglomerates in part, rather than with state governments. In his conference paper for the <em>Brookings Papers on Economic Activity </em>in March 2023, he demonstrates this pattern with examples from multiple sectors.<br /><br />“By way of specific examples, the share of the Top 5 groups by sales in Civil Engineering and Construction rose from 31% in 2016 to 42% in 2021, in Telecommunications from 65% to over 84%, and in the Retail trade sector from under 44% to over 65%. Similarly, the share of Top-5 groups by Assets rose sharply by 2021 to 68% in the Manufacturing of Basic Metals, 26% in the Manufacturing of Chemicals, 90% in the Manufacturing of Refined Petroleum and Coke, and 47% in the Manufacturing of Non-metallic Mineral Products (including cement and other building materials),” writes Acharya. <br /><br />While this strategy of ‘National Champions’ has benefitted the telecom sector, it has its caveats. The acceleration in the growth may lead to an oligopolistic economy, thereby restricting the entry of new players and stifling innovation. Additionally, a multi-dimensional concentration of power poses the threat of crony capitalism.<br /><br /><h2>National champions: checks and challenges</h2>There’s more to this debate. Arvind Subramanian and Josh Felman, in their paper titled ‘India’s Stalled Rise’ note that the collective impact of this strategy could be more adverse in India, more than anywhere else. They explain that the two big conglomerates — Adani Group and Ambani-led Reliance “have interests that extend throughout the economy, in defence production, ports and airports, energy, natural gas, petroleum, digital platforms, telecommunications, entertainment, media, retail, textiles, financial payments, and education.”<br /><br />Chaebols and Zaibatsu have/had their demerits that range from autocratic decision-making dubbed as ‘imperialistic management’ to the slow inclination of the market towards an oligopolistic structure. However, they weren’t shielded from international competition, nor was this strategy of creating ‘national champions’ shaped using government regulation. They were prevalent in sectors that faced competition internationally, like Hyundai in automobile manufacturing, keeping them in check.<br /><br />The lack of a similar system of checks and balances in India may lead to deeper implications of this strategy of ‘national champions.’ Viral Acharya further notes that they “grew not just at the expense of the smallest firms, but also of the next largest firms” and empirically established a causal link between market power and markups (broadly, profit). <br /><br />At a point when India has seen a monumental shift in infrastructure and looks to capture the market share that China could evacuate, the implications of a tilted policy could prove detrimental. While consolidation can improve performance and catalyse growth, we need to be very careful as a country of the direction we will set ourselves in at this crucial juncture.<br /><br /><h2>Also read:</h2><br />  <div type="Article" hostid="261" msid="112159576" title="India Cement employees to lose jobs after UltraTech acquisition? Chairman Srinivasan answers" mstype="2" mssubtype="0"><payload><![CDATA[seealso]]></payload></div><br />  <div type="Article" hostid="261" msid="112163130" title="Ambuja Cements Q1FY25 profit at Rs 789.63 crore; revenue at Rs 8,311.48 crore" mstype="2" mssubtype="0"><payload><![CDATA[seealso]]></payload></div><br />

Cementing dominance: Birla vs Adani, of Chaebols, conglomerates, and National Champions

<ul><li><keyword id="19955648" type="General" weightage="20" keywordseo="Adani-Group" source="keywords" meta.keywordsubtype="org" meta.entityname="Adani Group" meta.hostid="261" meta.entityid="Adani Group">Adani Group</keyword> has denied reports that it is in talks to acquire a stake in <keyword id="20253123" type="General" weightage="20" keywordseo="One97-Communications" source="keywords" meta.keywordsubtype="org" meta.entityname="One97 Communications" meta.hostid="261" meta.entityid="One97 Communications">One97 Communications</keyword>.</li><li>One97 Communications, the parent company of Paytm has also denied reports of a stake sale.</li><li>Recent media reports claimed that Adani Group is looking to enter the UPI and e-commerce segments.</li></ul> Gautam Adani-led conglomerate Adani Group has denied reports that it is in talks with Vijay Shekhar Sharma-led One97 Communications, the parent company of Paytm, for acquiring a stake in the fintech company.<br /><br />Amid reports that the Adani Group is looking to enter the <a href="https://www.businessinsider.in/business/news/adani-group-plans-to-foray-into-e-commerce-and-upi-segments-to-compete-with-mukesh-ambani/articleshow/110495484.cms">UPI and e-commerce</a> segments, a <a href="https://timesofindia.indiatimes.com/business/india-business/adani-in-talks-with-vijay-shekhar-sharma-to-acquire-stake-in-paytm/articleshow/110509772.cms">report</a> by the Times of India claimed that the company is in talks with One97 Communications for a stake acquisition, citing sources familiar with the matter.<br /><br />The report claimed that Paytm founder and CEO <keyword id="20004114" type="General" weightage="20" keywordseo="Vijay-Shekhar-Sharma" source="keywords">Vijay Shekhar Sharma</keyword> had met <keyword id="19929098" type="General" weightage="100" keywordseo="Gautam-Adani" source="keywords">Gautam Adani</keyword> at its Ahmedabad headquarters on Tuesday, May 28, regarding the deal.<br /><br />The report led to immense speculations across the business and political circles as expectations around Adani Group taking on the likes of JioFinance and Google Pay grew ripe. The share price of One97 Communications climbed 5%, hitting the upper circuit. The company’s share price reached INR 359.55.<br /><br />The opposition party Congress’s leader Jairam Ramesh launched a scathing attack on the Prime Minister, posting on X "Remember when Paytm was referred to as Pay to Modi? Prophetic words! Atmanirbhar to Parmatmanirbhar to Adaninirbhar!"<br /><br /><cmsannotation type="cmsannotation" annotationid="Adani Group issues a denial" comment="subhead" text="Adani Group issues a denial"><span data-til="noop">Adani Group issues a denial</span></cmsannotation><br /><br />The Adani Group has now come out and denied the media report. “We categorically deny this baseless speculation. It is totally false and untrue,” the Adani Group said in a statement.<br /><br /><cmsannotation type="cmsannotation" annotationid="One97 Communications also denies talks" comment="subhead" text="One97 Communications also denies talks"><span data-til="noop">One97 Communications also denies talks</span></cmsannotation><br /><br />In an official statement, One97 Communications denied reports of its talks with Adani Group.<br /><br />"We hereby clarify that the abovementioned news item is speculative and the company is not engaged in any discussions in this regard. We have always made and will continue to make disclosures in compliance with our obligations under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015," One97 Communications said in an official filing.<br /><br /><cmsannotation type="cmsannotation" annotationid="Adani Group looking to enter the UPI and e-commerce segments" comment="subhead" text="Adani Group looking to enter the UPI and e-commerce segments"><span data-til="noop">Adani Group looking to enter the UPI and e-commerce segments</span></cmsannotation><br /><br />Earlier, media reports claimed that the Adani Group is looking to enter the UPI and e-commerce segments in India.<br /><br />According to the reports, the Adani Group is reportedly considering applying for a license to operate on the country’s public digital payments network, the Unified Payments Interface (UPI). The group is also in talks with banks to offer a co-branded Adani credit card to its customers.<br /><br />The group is also reported to be in negotiations to enter the e-commerce segment through the government-backed Open Network for Digital Commerce (ONDC).<br /><br />A deal with Paytm, which has several years of experience in both e-commerce and payments, could have helped the Adani Group establish itself in these segments and take on existing players such as Reliance Industries, Google, PhonePe and more. <br /><br />Paytm has been facing several regulatory challenges in recent years, with the Reserve Bank of India (RBI) ordering Paytm Payments Bank Ltd to stop the bulk of its activities earlier this year. The action led to a whopping 50% drop in One97 Communications share price within two weeks in February.<br /><br />SEE ALSO:<br /><br /><h3 style="line-height:1.38;margin-top:0pt;margin-bottom:4pt;"><a href="https://www.businessinsider.in/business/news/adani-group-plans-to-foray-into-e-commerce-and-upi-segments-to-compete-with-mukesh-ambani/articleshow/110495484.cms">Adani Group could soon enter e-commerce and UPI segments, to rival Mukesh Ambani and Google</a></h3><h3 style="line-height:1.38;margin-top:0pt;margin-bottom:4pt;"><a href="https://www.businessinsider.in/sports/webstories/ipl-2024-award-winners-orange-cap-to-emerging-player-of-the-season-here-are-the-winners/slidelist/110454525.cms">IPL 2024 award winners – Orange cap to emerging player of the season, here are the winners</a></h3><h3 style="line-height:1.38;margin-top:0pt;margin-bottom:4pt;"><a href="https://www.businessinsider.in/tech/mobile/news/poco-f6-with-snapdraon-8s-gen-3-chipset-launched-starting-at-29999/articleshow/110367623.cms">Poco F6 with Snapdraon 8s Gen 3 chipset launched starting at ₹29,999</a></h3>

Adani-Paytm Deal: Both One97 Communications and Adani Group deny reports as ‘baseless’ and ‘speculative’

<keyword id="3658" type="General" weightage="20" keywordseo="india" source="Orion">India</keyword>'s foreign exchange reserves fell by $691 million to $562.808 billion as on December 23, according to <keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword> data released on Friday.<br /><br />Prior to this week, the forex reserves had slipped by $571 million to $563.499 billion.<br /><br />Forex reserves have been falling, as they are being used to bolster the declining rupee.<br /><br />The country's reserve position with the <keyword id="6366068" type="General" weightage="50" keywordseo="international-monetary-fund" source="Orion">International Monetary Fund</keyword> (IMF) was up by $45 million to $5.159 billion in the reporting week, the data showed.<br /><br />Meanwhile, foreign currency assets also fell by $1.134 billion to $498.49 billion during the week ending December 23, according to RBI data.<br /><br /><b>SEE ALSO:</b><br /><br /> <b><a href="https://www.businessinsider.in/business/auto/news/december-auto-sales-could-skid-sequentially-on-production-constraints-purchase-deferrals-due-to-inauspicious-period/articleshow/96617021.cms">December auto sales could skid sequentially on production constraints, purchase deferrals due to ‘inauspicious’ period</a></b><br /><br /> <b><a href="https://www.businessinsider.in/business/news/gautam-adani-man-of-the-year/articleshow/96610248.cms">Gautam Adani: Man of the year</a></b><br /><br /> <b><a href="https://www.businessinsider.in/stock-market/news/fpis-return-to-indian-equities-in-the-second-half-of-2022-but-bond-flows-are-still-in-the-red/articleshow/96563652.cms">FPIs return to Indian equities in the second half of 2022, but bond flows are still in the red</a></b><br />

Forex reserves fall to $562 billion during period ending Dec 23: RBI data

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Cementing dominance: Birla vs Adani, of Chaebols, conglomerates, and National Champions

Prerna

Deekshith

Adani-Paytm Deal: Both One97 Communications and Adani Group deny reports as ‘baseless’ and ‘speculative’

Sourabh Jain

Forex reserves fall to $562 billion during period ending Dec 23: RBI data

IANS

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