Ambuja Cements, an Adani group firm on Thursday, June 13, announced the acquisition of Penna Cement Industries Ltd (PCIL) at an enterprise value of ₹10,422 crore. A binding agreement for the acquisition has been signed, which will add 14 MTPA capacity to Adani group, taking the total tally to 89 MTPA (million tonnes per annum).
The acquisition will improve Adani group’s share in the cement market pan-India by 2 per cent and 8 per cent in south India, according to a regulatory filing by Ambuja Cements to the stock exchanges.
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Ambuja will acquire 100 per cent shares of PCIL from its existing promoter group P Pratap Reddy and family. PCIL has 14 MTPA capacity in Andhra Pradesh, Telangana, and Rajasthan (under-construction). The acquisition will be fully funded through internal accruals.
“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,” said Ajay Kapur, CEO & Whole Time Director of Ambuja Cement.
‘’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,” added Kapur.
Besides, it also has surplus clinker at Jodhpur plant which will support additional 3 MTPA cement grinding capacity. The deal will also strengthen Adani group’s sea transportation logistics with five bulk cement terminals at Kolkata, Gopalpur, Karaikal, Kochi and Colombo to serve peninsular India.
Earlier this year, the Adani family, led by billionaire businessman Gautam Adani, infused ₹8,339 crore into the group’s cement subsidiary Ambuja Cements Ltd. by fully subscribing to the latter’s warrants programme.
On Thursday, shares of Ambuja Cements settled 0.63 per cent lower at ₹664.30 apiece after hitting a new 52-week high mark of ₹680.20 on the BSE.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
