After ACC and Ambuja, now Adani eyes RINL

Have you heard about the famous Midas touch? Apparently, the Adani Group Chairman Gautam Adani is displaying it in full glory. One after another, he is foraying into new sectors and dethroning the established market players with ease. With calculated risk, he is aggressively putting all his might behind future technologies and companies. Just like Midas, all his calculated risks are paying off. This is also reflected in his swelling net worth. He is incessantly leapfrogging the top Billionaires chart.

Adani Group forays into a new Sector

The World’s second richest person Gautam Adani follows a well thought out strategy dubbed as self-seller and self-consumer strategy. After consolidating the success in the cement sector, Adani Group is all set to script the same success story in the Steel Sector. Reportedly, the Indian multinational conglomerate is planning to bid for the state-owned Rashtriya Ispat Nigam limited (RINL). The Union government is planning to completely divest its stake in RINL which is expected to happen in January 2023.

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Being a new entrant in this sector, it is expected that Adani Group will push aggressively as compared to the established steel giants like JSW Steel, Tata Steel and ArcelorMittal Nippon Steel. Furthermore, all these established steel companies had already expanded their business by acquiring dilapidated steel companies. They have put their bets on companies that were on the verge of insolvency and bankruptcy. Additionally, they also focus keenly on brownfield expansions and will give Adani a good run for its money during the bidding process.

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However, seeing the past trend of acquisitions and premium deals, Adani Group is said to be the favourite to defeat all its competitors, as and when the bids are done for the state-owned RINL.

Earlier, In January, the Cabinet Committee of Economic Affairs (CCEA) gave ‘in-principle’ approval to divest government stake in the state-owned steel producer. After this decision, the government is eyeing to achieve 100% disinvestment of RINL, its subsidiaries and joint ventures.

In April, the Department of Investment and Public Asset Management (DIPAM) floated a request for proposal for appointing a RINL asset value. It received positive responses from around ten entities. Apparently, DIPAM is entrusted with the duty of managing the government’s equity in public sector companies.

RINL will be a valuable asset for the new bidder

Notably, the RINL is also known as Visakhapatnam Steel Plant. The Steel producer has a production capacity around 7.3 million tonne per annum steel production. Currently, it has employs around 6,500 officers, 12,000 regular workers and 20,000 contract workers.

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Although RINL has been suffering losses, it has over valuable assets which can be utilised to change the fortune of the steel producer. RINL has over 24,000 acres of land which is valued at ₹1.5 lakh crore. It has strategic access to Gangavaram Port to import raw materials which will be of great significance if utilised properly.

Reportedly, the Modi Government might spin off the excess RINL immovable assets to a separate entity in order to attract more bidders. Earlier, the Adani group made a foray in the cement sector with the Adani-Holcim deal. With the $10 billion deal, the Adani group became the second-biggest player in the cement industry, second only to Ultratech Cement.

Also Read: Acquisition is the new cool for Gautam Adani

Adani’s Steel ambition not a new thing

Furthermore, the Adani group had shown its commitment to enter into the steel sector. In January, it signed a non-binding agreement with South Korea’s Posco. The deal was done with a massive investment of $5 billion. With this, it intends to establish a steel mill at Mundra in Gujarat. Additionally, with the help of Pasco’s modern technology, both the companies want to utilise renewable energy resources and green hydrogen.

The Adani group is on a shopping spree. In all these acquisitions, one thing that comes out is the well thought out strategy to break the mentality of thinking in Silos. The conglomerate has a huge investment in the infrastructure sector and thus wants to cater to its raw material demand from its own subsidiaries. This way it will reduce the cost of the finished project and sustain the growing business with the coherence and mutual support of all its subsidiaries. The ACC and Ambuja deal did wonders for the Indian Multinational giant. Now, it will replicate this success in the steel sector with the acquisition of state-owned steel producer RINL. It hopes to become a giant in cement and steel production, basic raw material needed for infrastructure.