Ambuja Cement has revealed its plans to purchase all the shares of Penna Cement Industries Limited, thereby making Penna Cement a fully owned subsidiary of Ambuja Cements. This acquisition aims to expand Ambuja Cements’ footprint in India, especially in South India, and open up opportunities in markets like Sri Lanka, as highlighted in the presentation by the Adani Group cement company.
The deal is valued at Rs 10,422 crore in terms of enterprise value. The cement company stated that the entire transaction would be financed using internal earnings. This transaction involves acquiring a cement capacity of 14.0 million tonnes per annum. Additionally, the seller is responsible for completing the under-construction 4.0 MTPA cement capacity at Jodhpur IU and Krishnapatnam GU.
Adani Cement said, “Cost to complete the same is part of Enterprise Value.” The acquisition will accelerate the progress of Ambuja Cements towards reaching a production capacity of 140 MPTA by 2028.
Following the acquisition of Penna, Adani Cement’s operational capacity now stands at 89 MTPA. The remaining 4 MPTA capacity under construction will become operational within 12 months.
PCIL currently has a cement capacity of 14 MTPA, with 10 MTPA already operational. The remaining capacity is under construction at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA) and is expected to be completed within 6 to 12 months.
Adani Cement’s acquisition will speed up planned capacity expansion, boosting South India’s market share by 8-15% and Pan India’s share by 2%. Surplus clinker at the Jodhpur plant could increase cement grinding capacity by 3 MTPA in the northern market, in addition to the acquired 14 MTPA capacity.
Penna’s surplus land and limestone reserves at integrated units offer Adani Cement the opportunity to expand clinker lines with minimal investment. Additionally, Penna’s plants have railway siding, except for Talari Cheruvu (Tadipatri).
Ambuja Cement, a part of the Adani Group, signed a binding agreement to acquire Penna Cement Industries Ltd (PCIL) on Thursday. This acquisition strengthens Adani Cement’s Sea Transportation logistics with five bulk cement terminals at Kolkata, Gopalpur, Karaikal, Kochi, and Colombo, serving peninsular India.