Ahmedabad:
Adani Group company Ambuja Cements on Thursday offered Penna Cement Industries Limited (PCIL) Rs. 10,422 crore was announced to be acquired at a market value of Rs. The deal will increase Adani Group’s market share in the cement sector in South India. Apart from this, Ambuja Cements will also be able to enter Sri Lanka, where PCIL is present through one of its local subsidiaries.
The deal will also provide the Adani Group company with sufficient limestone reserves. This will help Ambuja Cements achieve its target of achieving 14 crore tonnes per annum capacity by FY 2027-28. The two companies have signed a definitive agreement for the acquisition, the company said in a statement. Under the agreement, Ambuja Cements will buy 100 percent shares of the company from PCIL promoter group P Pratap Reddy and family.
The acquisition of Penna Cement will increase Adani Group’s cement production capacity by 14 million tonnes per annum. With this, Adani Group’s total cement production capacity will increase to 89 million tonnes annually. “The acquisition will be funded entirely from internal accruals,” Ambuja Cement said in a statement.
Ajay Kapoor, Chief Executive Officer (CEO) and Whole-time Director of Ambuja Cements, terming it an ‘important step’ in the company’s rapid growth journey, said, “By acquiring PCIL, Ambuja aims to increase its market share in South India. And in the cement industry. makes an important contribution.
Penna Cement has a total production capacity of 14 million tonnes per annum in Andhra Pradesh, Telangana and Rajasthan. Of these, 10 million tonnes capacity is operational while 40 lakh tonnes capacity is under construction.
According to the statement, the acquisition will also strengthen the maritime transportation logistics of the Adani group. Under this, five bulk cement terminals will be opened at Kolkata, Gopalpur, Karaikal, Kochi and Colombo to serve peninsular India.
According to the statement, with this acquisition, the Adani group’s share of the cement market in all India will increase by two per cent and in South India by eight per cent. The company expects to close the deal in the next three-four months. However, this will depend on regulatory and other government approvals.
Ambuja Cement said the acquisition is in line with its strategy to increase its presence in the cement manufacturing market. The company aims to increase its capacity to 140 million tonnes per annum by 2028 and increase market share to 20 percent.
Adani Group entered the cement business in September 2022 by acquiring Ambuja Cements from Swiss company Holcim. Ambuja Cements also holds 51 percent stake in ACC Limited.
The company last December paid Saurashtra-based Sanghi Industries Ltd Rs. Also acquired for an enterprise value of 5,185 crores. Established in the year 1991, PCIL is expected to spend Rs. 1,241 crore was the consolidated turnover. Apart from South India it also does business in Sri Lanka through its subsidiary.
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