Adani Group-owned Ambuja Cements on June 13 said it will acquire 100 percent stake in Penna Cement Industries Ltd (PCIL) for an enterprise value of Rs 10,422 crore. The move comes as Adani targets capacity of 140 million tonne per annum (MTPA) by 2028.
"Indicative time period for completion of the acquisition is within 3 – 4 months," said Ambuja Cements in a stock exchange filing. Amubja will acquire the stake from PCIL promoter group P Pratap Reddy and family. The acquisition will be fully funded through internal accruals, according to the statement.
The deal comes as Adani aims to capture 20 per cent market share by FY28 amid robust demand for the building material in the country. "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," the company said in a statement.
In April, the cement maker signed another agreement to acquire a grinding unit in Tamil Nadu for Rs 413.75 crore, aiming to expand its presence in the South Indian market.
Through the PCIL deal, the group looks to benefit from the company's strategic location and sufficient limestone reserves and the bulk cement terminals (BCTs), which will give the group access to the eastern and southern parts of peninsular India, apart from an entry to Sri Lanka, through the sea route.
As of now, PCIL has total installed cement production capacity of 10 million tonnes per annum (MTPA). This capacity is spread across its four integrated manufacturing facilities and two grinding units located in Andhra Pradesh, Telangana, and Maharashtra. Additionally, 4 MTPA capacity is under construction at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA) and will be completed within 6 to 12 months.
Around 90% of the cement capacity comes with 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, according to he filing.
"The existing dealers of PCIL will move to Adani Cement’s market network to bring in formidable synergy," said Ambuja in a press release.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
