Ambuja Cement acquires Penna Cement Industries in Rs 10,422cr deal

Ambuja Cement, a subsidiary of Adani Cement and part of the diversified Adani Group, has announced the acquisition of Penna Cement Industries Ltd (PCIL) for an enterprise value of Rs. 10,422 crore. This acquisition will see Ambuja Cement acquiring 100% shares of PCIL from its existing promoter group, led by Mr. P. Pratap Reddy and family, fully funded through internal accruals.

Strengthening Market Position and Capacity

“This landmark acquisition is a significant step forward in Ambuja Cement’s accelerating growth journey,” said Mr. Ajay Kapur, CEO & Whole Time Director of Ambuja Cement. “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. Importantly, the bulk cement terminals (BCTs) will prove to be a gamechanger by giving access to the eastern and southern parts of peninsular India, apart from an entry to Sri Lanka, through the sea route. Our aim is to make PCIL highly competitive on cost and productivity and improve its operating performance.”

PCIL’s Operational Capabilities and Future Plans

PCIL currently has a cement capacity of 14 MTPA, with 10 MTPA operational and the remaining under construction at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA), expected to be completed within 6 to 12 months. Approximately 90% of the cement capacity is supported by railway sidings, captive power plants, and waste heat recovery systems. Additionally, the surplus clinker at the Jodhpur plant will support an extra 3 MTPA cement grinding capacity, further enhancing production capabilities.

Strategic Synergies and Market Impact

The acquisition will strengthen Adani Cement’s sea transportation logistics with five bulk cement terminals located in Kolkata, Gopalpur, Karaikal, Kochi, and Colombo, facilitating efficient service to peninsular India. This move is expected to improve Adani Cement’s market share across India by approximately 2%, with a notable increase of around 8% in South India.

Key Takeaways

– Ambuja Cement to acquire 100% stake in PCIL for Rs. 10,422 crore.

– Acquisition adds 14 MTPA capacity, with a target to reach 140 MTPA by 2028.

– Strengthened logistics with five bulk cement terminals to enhance sea transportation.

– PCIL’s capacity to increase with ongoing projects and surplus clinker utilization.

– Acquisition funded through internal accruals, improving market share pan India.

This strategic acquisition underscores Ambuja Cement’s commitment to expanding its footprint and enhancing its operational capabilities within the highly competitive cement industry, positioning itself as a formidable leader in the market.