Ambuja Cements To Acquire Penna Cement For Rs 10,422 Crore To Expand Southern Footprint

Ambuja Cements Ltd. will acquire Hyderabad-based Penna Cement Industries Ltd. at an enterprise value of Rs 10,422 crore, as the Adani Group cementmaker plans to increase its footprint in southern India. Ambuja will acquire 100% shares of PCIL from the promoter group, P Pratap Reddy and family, according to a company statement on Thursday.

The acquisition will be fully funded through internal accruals and the deal is expected to be completed within three to four months.

Existing dealers of PCIL will move to Adani Cement Ltd.'s network for synergy, the company said. The acquisition is expected to improve Adani Cement's market share pan-India by around 2% and in south India by around 8%.

“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," said Ajay Kapur, chief executive officer of the Adani Group's cement business. "PCIL's strategic location and sufficient limestone reserves provide an opportunity to increase cement capacity through streamlining and additional investment."

The bulk cement terminals in Pennar will provide access to the eastern and southern parts of peninsular India, apart from an entry to Sri Lanka, through the sea route, he further said.

The acquisition will also strengthen Adani Cement's sea transportation logistics with five bulk cement terminals at Kolkata, Gopalpur, Karaikal, Kochi and Colombo to serve peninsular India, according to the company.

About Penna Cement Industries

Privately held Pennar Cement has operations in India and Sri Lanka, both directly and through its subsidiaries. The consolidated turnover of PCIL in the year ended March 2024 was Rs 1,241 crore.

The company has 14 million tonnes per annum cement capacity, of which 10 MTPA is operational, and the remaining is under construction in Andhra Pradesh, Telangana, and Rajasthan and will be completed within six to 12 months.

Around 90% of the cement capacity comes from railway sidings, and some are supported by captive power plants and waste heat recovery systems. Further, surplus clinker at the Jodhpur plant will support an additional 3 MTPA cement grinding capacity over and above 14 MTPA, the statement said.

Krishnapatnam grinding unit is located 178 kms from Chennai. (Source: Pennar Cement website)

Last year, Ambuja Cements acquired Gujarat-based Sanghi Industries Ltd. in an all-cash deal for an enterprise value of Rs 5,000 crore. The company has a clinker capacity of 6.6 million tonnes per annum, cement capacity of 6.1 million tonnes per annum and limestone reserves of 1 billion tonne.

Shares of Ambuja Cements ended 0.57% higher at Rs 664.3 apiece, ahead of the announcement, compared with a 0.27% advance in the BSE Sensex.

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