Cement Capex Delayed Due to Execution Challenges; Focus on Completing Ongoing Projects: Karan Adani

New Delhi, May 18: Ambuja Cements acknowledges project execution delays due to contractor issues and incomplete engineering, leading to a moderate FY27 capex of ₹6,000-6,500 crore while prioritizing completion of ongoing projects.

Reasons for Delays

Ambuja Cement Director Karan Adani admitted that execution in the cement business has fallen short of the group's standards due to contractor issues, a lack of an execution team, and incomplete engineering work. "We did not choose the right contractor for execution," he said. The company is now "pausing and correcting" itself and "wants to first complete our projects before we start any new projects."

Corrective Measures

The company is using a six-month period to complete engineering work for proposed projects before starting execution. "We are using the six months to complete all our engineering for the new projects. Once that is in place, we will be looking at starting the project," Adani said. He expressed confidence that they would now be able to complete these projects within the given timelines.

Acquisition Challenges

Ambuja Cements CEO Vindo Behety said turnaround initiatives have taken longer than expected, resulting in elevated costs. "Some of these plants, especially Penna, needed higher than expected time for maintenance capex and overall upkeep. So on a cost front, we have seen a bit of higher cost compared to our own expectations and therefore some disappointments." Operational breakdowns were largely concentrated in acquired assets at Penna Industries and Sanghi plants.

Growth Strategy and Capacity

While continuing to evaluate inorganic opportunities, Adani said the primary focus remains on organic growth and greenfield expansion. In FY26, Adani's cement capacity increased to 109 MTPA. The company expects to hit capacity of almost 119 million tonnes by end of FY27. The Adani Group entered the cement sector in September 2022, acquiring controlling stakes in Ambuja Cement from Holcim for USD 6.4 billion.