Adani Group merges Sanghi Industries, Penna with Ambuja Cements

Taking another step towards consolidation in the cement sector, Adani Group-led cement major Ambuja Cements has announced the merger of its subsidiaries Sanghi Industries Limited (SIL) and Penna Cement Industries Limited (PCIL) via a separate scheme of arrangement.

As part of the scheme of arrangement, Ambuja Cements will issue 12 equity shares of the face value of ₹2 each for every 100 equity shares of SIL of the face value of ₹10 each, recommended by the valuers and accepted by its board. Thereafter, the eligible shareholders of Sanghi will become the shareholders of Ambuja Cements. The company says these transactions will be effected with requisite approvals from stakeholders and authorities, which could take around 9-12 months.

The development comes after Ambuja Cements acquired a 56.74% stake in Sanghi Industries at an enterprise value of ₹5,000 crore in August 2024. Ambuja Cements acquired the stake from its existing promoter group, Ravi Sanghi and family. Before that, in June 2024, Ambuja Cements acquired Penna Cement Industries for ₹10,422 crore, a deal which saw the company taking over PCIL entirely from its current owners.

Ajay Kapur, CEO – Cement Business, Adani Group, says the merger will make the company more competitive and efficient, enhancing shareholder value. "Enhanced working capital management and internal funds will support the growth of our business operations. Unified cash flow management will pool resources for faster expansion and cost savings in administration and governance, simplifying compliance requirements."

Kapur adds that the advancement through the larger entity will increase market competitiveness and deliver greater value to its shareholders.

Sandhi has a clinker capacity of 6.6 MTPA, a cement capacity of 6.1 MTPA, and limestone reserves of 1 billion tonnes. SIL’s Sanghipuram plant is India’s largest single-location cement and clinker unit by capacity, with a captive jetty and captive power plant.

As per Adani Ports and Special Economic Zones (APSEZ) CEO Karan Adani, Ambuja’s goal of 140 MTPA capacity by 2028 is well on track, and with these acquisitions, the target will be achieved ahead of time. "The Adani Group is well on course to achieve its target of 140 MTPA of cement manufacturing capacity by 2028 ahead of time," he said in August 2024.

Penna has four integrated plants in Andhra Pradesh and Telangana, along with a grinding unit in Maharashtra. It has an operational capacity of 10 MTPA. Additionally, two plants, with a capacity of 2 MTPA each, are under construction in Krishnapatnam and Jodhpur, which are expected to be completed within the next 8-12 months. It also has five bulk cement terminals at Kolkata, Gopalpur, Karaikal, Kochi, and Colombo (Sri Lanka).

In a series of acquisitions in the cement sector, Ambuja Cements also announced a merger with Adani Enterprises Ltd's cement business, Adani Cementation Ltd. (ACL), in June 2024, post which ACL became a wholly owned subsidiary of Ambuja Cements. In October 2024, Adani Group acquired a controlling stake in ITD Cementation India from its Thailand-based promoter, Italian-Thai Development Public Company Ltd (ITD) for ₹5,700 crore. It also bought a 46.8% stake in another cement major, Orient Cement Ltd (OCL), for an equity value of ₹8,100 crore.

Adani group-led Ambuja Cements, with its subsidiaries, has taken the Adani Group’s cement capacity to 89 MTPA with 22 integrated cement manufacturing plants and 21 cement grinding units across the country. Its profit fell 42.5% year-on-year to ₹456 crore for the quarter ended September compared with ₹793 crore in the corresponding period last fiscal. The revenue rose marginally by 1.2% year-on-year to ₹7,516 crore vs ₹7,423 crore in the year-ago period.

The share of Ambuja Cements closed 1.01% down at ₹570.95 on the BSE today.