Adani group firm Ambuja Cements to acquire Penna Cement : Adani Group has announced to buy another cement company. Gautam Adani, one of the richest industrialists in the country, is now going to acquire Hyderabad-based Penna Cement. This deal is being done on the basis of a valuation of Rs 10,422 crore. This acquisition is being done through Ambuja Cements, a part of the Adani Group. On completion of this deal, the annual production capacity of Ambuja Cements will increase by 14 million tonnes. Ambani Group is second in the country in terms of cement production.
Will expand in South India and Sri Lanka
This deal will increase the market share of Adani Group in the cement sector in South India. Not only this, through this the cement business of the group will reach Sri Lanka. Penna Cement Industries Limited (PCIL) operates a unit in Sri Lanka through a local subsidiary. Along with this, through this acquisition, the Adani Group company will also get a large reserve of limestone, which is used as raw material in the cement industry. Adani Group is planning to achieve a capacity of 140 million tonnes per annum (MTPA) in terms of cement production by FY 2028.
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Improvement in market share
It is expected that this acquisition will increase Adani Cement’s market share in the Indian market by 2 percent, while it will improve by 8 percent in South India. The company hopes that the acquisition process will be completed within the next 3 to 4 months. However, it is necessary to get the necessary government / regulatory approval for this. Adani Group company Ambuja Cements says that this acquisition is part of its strategy to increase its share in cement production. Adani Group plans to achieve 140 MTPA capacity and about 20 percent market share by 2028. Last December, Adani Group completed the acquisition of Sanghi Industries Limited, a company based in Saurashtra, Gujarat, for Rs 5,185 crore.
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Signing of the acquisition agreement
A binding agreement has been signed for the acquisition. Under this agreement, Adani Group company Ambuja Cements will buy 100% shares of PCIL from the company’s current promoter group P Pratap Reddy and his family. After the acquisition, the total production capacity of Adani Cement will increase to 89 MTPA. Ambuja Cements said that this acquisition will be financed entirely from internal sources. Ambuja Cements CEO and whole-time director Ajay Kapoor has described this acquisition as an important step in the company’s development journey.
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Capacity and Expansion of Penna Cement
Penna Cement has 14 MTPA cement production capacity in Andhra Pradesh, Telangana and Rajasthan, of which 10 MTPA capacity is already in production, while the remaining capacity is under construction at Krishnapatnam and Jodhpur, which will be completed in 6 to 12 months. The deal will also strengthen Adani Cement’s sea transportation logistics, which includes five bulk cement terminals at Kolkata, Gopalpur, Karaikal, Kochi and Colombo.
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Performance of Penna Cement
Penna Cement, a company established in October 1991, had a consolidated turnover of Rs 1,241 crore during the financial year ended March 2024. About 90 percent of PCIL’s cement capacity is close to the railway track. Apart from this, the company also has some captive power plants and waste heat recovery systems. Adani Group entered the cement business in September 2022 after buying Ambuja Cements from Swiss firm Holcim. Ambuja Cements also owns 51 percent stake in ACC Limited, another large cement company of the country.