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Adani’s Ambuja Cements Seals the Blockbuster Deal: Acquires Penna Cement for Rs 10,422 Crore

Adani Group’s subsidiary, Ambuja Cements Ltd, has finalized the acquisition of Penna Cement Industries Ltd (PCIL) for a staggering enterprise value of Rs 10,422 crore.

The acquisition marks a significant move in Ambuja’s expansion strategy within the cement and building materials sector, as part of the broader vision of the Adani Group.

In an official exchange filing, Ambuja Cements revealed its purchase of 100 per cent shares of PCIL from its existing promoter group, P Pratap Reddy and family. Notably, the acquisition is entirely self-funded through internal accruals, showcasing the financial strength and confidence of Ambuja in the deal.

PCIL, with a cement capacity of 14 million tonnes, of which 10 million tonnes is currently operational, stands as a strategic asset for Ambuja. Additionally, ongoing construction projects in Krishnapatnam and Jodhpur, adding 2 million tonnes each, are set to be completed within the next 6 to 12 months. The majority of PCIL’s cement capacity is complemented by railway sidings, while some benefit from captive power plants and waste heat recovery systems. Moreover, surplus clinker at the Jodhpur plant will enable an additional 3 million tonnes of cement grinding capacity, enhancing the overall production potential.

Ajay Kapur, CEO & Whole Time Director at Ambuja Cements, emphasized the strategic advantages of PCIL’s location and abundant limestone reserves. He highlighted the potential for capacity expansion through debottlenecking and further investments. Particularly noteworthy are the bulk cement terminals (BCTs), which open up access to the eastern and southern regions of India, as well as potential international markets such as Sri Lanka via sea routes.

The acquisition comes amidst a bullish outlook for the Indian cement industry, projected to witness a compound annual growth rate (CAGR) of 7-8 per cent over the next five years. Adani Group’s commitment to investing $3 billion in its cement business reflects a forward-looking approach, capitalizing on the sector’s growth potential.

Ambuja, along with its subsidiaries like ACC Ltd, commands a substantial cement production capacity of 78.9 million tonnes annually, spread across 18 integrated cement manufacturing plants and 19 cement grinding units nationwide. The recent acquisition of Sanghi Industries Ltd further solidifies Ambuja’s market presence.

Although the announcement was made post-market hours, the implications of Ambuja’s acquisition reverberate across the industry, underscoring the company’s strategic positioning and commitment to growth. Despite a slight dip in Ambuja Cements’ share price, settling 0.63 per cent lower at Rs 664.30, the long-term implications of the acquisition are poised to shape the company’s trajectory positively.

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