Company overview

Ambuja Cements Ltd, (NSE:AMBUJACEM) a part of the global conglomerate LafargeHolcim, is among the leading cement companies in India. Ambuja Cement has provided hassle-free, home-building solutions with its unique sustainable development projects and environment-friendly practices since it started operations. Currently, Ambuja Cement has a cement capacity of 29.65 million tonnes with five integrated cement manufacturing plants and eight cement grinding units across the country. 1

The company has many firsts to its credit – a captive port with four terminals that has facilitated timely, cost-effective, cleaner shipments of bulk cement to its customers. To further add value to its customers, the company has launched innovative products like Ambuja Roof Special, Ambuja Cool Walls, Ambuja Kawach and Ambuja Cement Compocem. The new products not only fulfil important customer needs but also help in significantly reducing carbon footprints.

Ambuja Cement is the industry leader in responsible use of resources, both natural and man-made. The company has been certified over eight times water positive, a feat achieved through conservation efforts and increasing water efficiency in its plants. It is also plastic negative, by burning as much as over 50,000 tonnes of plastic waste in its kilns, equivalent to 1.5 times of total plastic used. The company also generated 7.1% of its power needs from renewable resources.

Sustainable profitable growth is ingrained in the company’s DNA. Ambuja Cement’s multi-pronged strategy, including triple bottom line accounting method; True Value; good corporate governance practices; overarching corporate environment policy; and sustainable supply chain policy have helped cement the company's credentials as a sustainable manufacturer. Ambuja Cement's Sustainable Development Ambition 2030 provides strategic direction to the company's long-term sustainability vision. All Ambuja Cement plants are ISO 14001 certified.

Ambuja Knowledge Centres (AKCs), a unique initiative by the company, serves as a knowledge sharing platform for construction professionals that includes practical workshops on mix design and quality supervision. Currently, over 30 AKCs are functional across India.

The company also works closely with communities that live around its plants, through its CSR arm, the Ambuja Cement Foundation (ACF). ACF implements need-based and participatory programmes in the thematic areas of water resource development, health and sanitation, women empowerment, rural infrastructure, education and agro-based/skill-based livelihood creation.

The company's most distinctive attribute is its approach to business. Ambuja Cement follows a unique homegrown philosophy   that gives people the authority to set their own targets and the freedom to achieve their goals. Its focus has been consistent on two major building blocks that has resonated through its daily operations – Quality (of products) and Safety (of all those involved in the creation of its products).

LafargeHolcim is the leading global building materials and solutions company serving masons, builders, architects and engineers all over the world. Group operations produce cement, aggregates and ready-mix concrete which are used in building projects ranging from affordable housing and small, local projects to the biggest, most technically and architecturally challenging infrastructure projects. As urbanisation increasingly impacts people and the planet, the Group provides innovative products and building solutions with a clear commitment to social and environmental sustainability. With leading positions in all regions, LafargeHolcim employs around 90,000 employees in more than 80 countries and has a portfolio that is equally balanced between developing and mature.


Ambuja Cement

Known for its high strength, high performance cement caters to each of its three customer segments – Individual Home Builders (IHBs), Masons and Contractors, and Professionals.2

Ambuja Roof Special

Ambuja Roof Special is a special quality PPC cement with advanced SPE technology. It extracts 100% of silicate gel from cement that helps in making the concrete stronger, denser and leak proof, resulting in strengthening of the roof.

Ambuja Cool Walls

Can Cement keep your house cool? Of course.. with Ambuja's temperature resistant concrete blocks.

Ambuja Cement Compocem

At Ambuja we’ve always looked to create the strongest cement, with the lightest carbon footprint. By creating an innovative product line, Ambuja is bringing sustainability to people’s homes.

Ambuja Buildcem

Ambuja developed an innovative way of using fly ash to produce high strength Portland Pozzolana Cement

Ambuja Powercem

Ordinary Portland cement is the most common type of cement and is a basic ingredient of concrete & mortar. Ambuja branded it as Powercem.

Ambuja Railcem

Ambuja Railcem (OPC 53-S) is a high Blaine Portland cement, useful for making concrete Railway sleepers. Apart from its main usage of concrete sleepers manufacturing

Alccofine micro materials

Industry Overview

Indian Economy

India’s GDP has expanded at a healthy rate over the last decade, with a CAGR of over 7%. This has resulted in improvements across key development indicators of the economy. The company's country has witnessed a reduction in poverty rate by 10%, increase in pace of highway construction from 12 km/day to 27 km/day and a 6% CAGR increment in per capita income. India is currently the 5th largest economy in the world with an internal target of becoming a USD 5 trillion economy by 2024.3

The agricultural, industrial, manufacturing and service sectors are the growth enabling pillars of the economy. The service sector is the largest contributor to the nation’s GDP, followed by the manufacturing sector. With the intent to boost the domestic manufacturing sector output, the Government has spearheaded several campaigns, reforms and initiatives like Make in India, Sagarmala, Start-up India and has commissioned dedicated freight corridors to help the sector increase its pie in the overall contribution to GDP.

India’s improved ranking (currently at 63rd position out of 190 countries) in Ease of Doing Business (improved by 67 positions over the past three years), is an outcome of the Government’s efforts towards making the domestic environment conducive for attracting foreign capital. The reduction of corporate taxes was one such step taken in September 2019, the actual impact of which should reflect in the second half of 2020.

However, the GDP growth rate has witnessed a diminishing trend over the past few quarters. This can be attributed to the overall dip in consumption and muted manufacturing output and exports of goods and services.

Government expenditure on infrastructure and affordable housing waned in the second half of 2019. On the service sector front, the trade, hospitality, transport and communications businesses were amongst the ones which witnessed significant impact of slowdown.

To revive the economy and enhance consumer expenditure, fundamental reforms and consumer-centric policies are required coupled with heightened execution and implementation capabilities. In this regard, the Government has taken steps in the right direction by reducing repo rate to the tune of 135 basis points in 2019, exempting start-ups from payment of angel tax, infusion of 70,000 crores in public sector banks via two-stage bank recapitalization measures and planned expenditure on infrastructure development to the tune of 102 lakh crores.

Cement Industry

In 2019, growth in demand for cement hovered around 2-3% amid tough macro-economic conditions, muted demand in housing sector, pre-budget cutbacks in infrastructure spending and weak private sector contribution.

The year began on a positive note with the industry reporting double-digit growth in the first quarter (Jan-Mar 2019). But owing to the general election, labor shortages, weakness in realty sector and prolonged monsoon, the growth momentum was arrested and thereon the industry witnessed a downturn. In particular, the negative impact could be felt in the eastern and southern regions, while the central and northern regions stabilized the downward pressure on the overall industry growth rate.

The broader outlook for the cement sector remains positive bearing in mind the Center’s renewed focus on infrastructure development and housing sector.

Business Overview

The year 2019 was a challenging year from demand perspective. Even as the Indian economy continued to struggle and the market analysts continued to look for answers, the weather played havoc with unusually high rains and storms, virtually stalling construction activity in large parts of the country.4

The pollution levels in north reached a new high and National Green Tribunal banned construction activity in the National Capital Region, just when the weather seemed to ease out.

The GDP growth rate declined to 6.1% from the level of 7.2% in previous year. The Index of Industrial Production growth also slowed down to 3.6% from 4.4% as the secondary effects of RERA, Demonatization and GST kicked in.

Despite the headwinds, Ambuja’s sales volume de-grew by only 0.9% over the entire year with the last quarter registering a healthy growth of 6.6%.

Product Rationale

The company's product development team has worked extensively on understanding the market dynamics in terms of demand for and supply of certain types of products with specific features. This has helped it develop and launch products in segments and markets where the company foresee significant growth potential over the coming years.

As part of its renewed approach towards optimal product-mix, the company introduced ‘Ambuja Kawach’, which is a premium water-proof cement along with Dry Mortar segment products including Ready Mix Plaster, Wall Putty, Tile Adhesive and Seelan Seal.

These products will help it increase its consumer wallet share and scale it to 3x of current share and penetrate retail markets. With the aid of green-product launches in 2019, the Company has delivered greater value proposition to end-consumers. The company's constant endeavor is to make available high-quality products meeting the requirements and demands of its partners and customer-base and these launches further consolidate its belief.

In addition to cementing the Company’s relationships with existing customers and partners through the retail channel by way of diverse offerings, these products have also enabled the retailers to expand their businesses.

The Company is transitioning from product-based offerings to application-based offerings – Ambuja Wall Solution. This entails bundling products for the same application area and creating a product basket, which can then be taken to the market and offered as a complete package.

Expansion Projects and New Investments

While bolstering its market position, the Company made progress on several projects to serve its customers in an efficient, cost-effective, reliable and environment-friendly manner.

The Company focused on the consolidation and optimization of its existing capacities in all the three regions. In accordance with its policies of ‘Zero Harm’, clean & energy efficient infrastructure, cost efficiency and environment-friendly material handling systems and sustainability initiatives, the Company ensured the highest standards of safety with the help of the capital investments made over the course of the year.

Setting up of a Greenfield integrated plant with a capacity of 3.0 million tonnes clinker and 1.8 million tonnes cement grinding at Marwar-Mundwa in Nagaur District of Rajasthan, with a total investment of ₹2,350 Crores. The new plant will be commissioned during the current year 2020. Necessary orders have been placed for the clinker and cement projects. 40% of the civil work has been completed and Mechanical Erection will commence in Q1 2020

In order to secure long-term limestone requirement for the Bhatapara plant, Ambuja acquired a new mining lease at Maldi-Mopar. Environmental clearances as well as other required approvals for the mining lease have already been received. The following two projects are nearing completion:

  • Opening of limestone mining with mining infrastructure at Maldi-Mopar Mines at an approved cost of ₹120 Crores
  • Installation of the Limestone Transportation System for the said mines at an approved cost of ₹85 Crores

To secure long-term limestone requirement of the Ambujanagar plant in Gujarat, the Company has acquired a new mining lease in Loadhva. The environmental clearances and other required approvals for the mining lease have already been obtained; and mining equipment has been delivered. Land acquisition is underway; development and infrastructure work for the mine is in progress and is expected to be operationalized by March 2020

To secure long-term limestone requirement of Maratha Cement Works plant in Chandrapur, Maharashtra, the Company has acquired a new mining lease in Nandgaon Ekodi. Environmental clearances and other required approvals for the mining are in progress

In order to minimize power cost, the Company has drawn up a plan to set up Waste Heat Recovery Based Power Plants at Darlaghat and Bhatapara, at a combined investment of ₹ 378 Crores. These are expected to be functional by Q2 2021

Financial Highlights

Ambuja Cements Ltd announced its Q2CY20 results on July 24, 2020. Consolidated net revenue of Ambuja Cements Ltd in Q2CY20 stood at Rs2,176.75cr, which declined by 27.04% yoy from Rs2,983.56cr in Q2CY19.5

EBITDA stood at Rs595.21cr in Q2CY20 which decreased by 14.77% yoy. For Q2CY19, it had posted EBITDA of Rs698.39cr. EBITDA margin as of Q2CY20 was at 27.34% which rose by 3.9% yoy against the same quarter, the previous year.

The consolidated net profit in Q2CY20 came in at Rs453.37cr which rose  by 10.03%, as compared to Q2CY19, when it had reported Rs412.05cr. The net profit margin in Q2CY20 came in at 20.83% which increased 7.02% yoy. The net profit margin for Q2CY19 was at 13.81%.


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Created by Asif Farooqui on 2020/10/12 17:34
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