Adani Group Acquires Penna Cement Ambuja Cement enters into a binding agreement to acquire 100 per cent stake in Penna Cement Industries Ltd, moving towards its target capacity of 140 million tonnes per annum (MTPA) by 2028.
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Ambuja Cement, the cement and building material company of Adani Group, announced the signing of a binding agreement for the acquisition of Penna Cement Industries Ltd (PCIL) at an enterprise value of INR 10,422 crore. Ambuja will acquire 100 per cent shares of PCIL from its existing promoter group. P. Pratap Reddy and family. The acquisition will be fully funded through internal accruals as per the company's press release.
PCIL boasts a robust cement production capacity of 14 million tonnes per annum (MTPA), with 10 MTPA already functional. The expansion is underway at Krishnapatnam and Jodhpur, each adding 2 MTPA, which is expected to be operational in the next 6 to 12 months. Notably, nearly 90 per cent of this capacity is enhanced by the presence of railway sidings, while select facilities also benefit from self-sustaining power plants and waste heat recovery systems.
Additionally, the Jodhpur facility is poised to contribute an extra 3 MTPA in cement grinding capacity, thanks to its surplus clinker, pushing the total beyond the initial 14 MTPA. In a strategic move to consolidate market presence, PCIL's existing network of dealers will be integrated into Adani Cement's expansive marketing framework, creating a powerful synergy within the industry.
"By acquiring PCIL, Ambuja is poised to expand its market presence in south India and reinforce its position as a pan-India leader in the cement industry. PCIL's strategic location and sufficient limestone reserves provide an opportunity to increase cement capacity through debottlenecking and additional investment," stated Ajay Kapur, CEO & whole time director of ambuja cement. "Importantly, the bulk cement terminals (BCTs) will prove to be a game changer by giving access to the eastern and southern parts of peninsular India, apart from an entry to Sri Lanka, through the sea route."
Adani cementing itself as market leader
In a bold bid to dominate the cement industry, Adani Group is executing a series of strategic acquisitions, aiming to outpace UltraTech Cement of the Aditya Birla Group and emerge as the leading cement producer in the next three to four years. The Indian cement sector is buoyed by the government's unprecedented infrastructure spending, anticipating a demand spike. The group is keeping aside a generous amount of $3 billion for these acquisitions to position itself to be India's largest cement manufacturer.
Ambuja Cement stands as a key acquisition for Adani group in the cement sector, distinguished by its substantial cash reserves amounting to INR 24,338 crore and a debt-free status. Adani Group has secured a significant 63.15% stake in Ambuja Cements Ltd. Read more.
