Shares of Ambuja Cements rose as much as 1% in opening trade on Thursday after the Adani Group-owned cement producer acquired Sanghi Industries at an enterprise value of ₹5,000 crore.
Ambuja Cements will acquire 56.74% shares of Sanghi Industries from its existing promoter group, Ravi Sanghi and family, the cement maker says in a statement. The acquisition will be fully funded through internal accruals.
Reacting to the development, shares of Ambuja Cements opened at ₹465 before hitting a six-month high of ₹468.50 apiece on the National Stock Exchange (NSE). The company's market capitalisation rose to ₹92,173 crore.
The acquisition is expected to help Ambuja Cements to strengthen its market leadership and increase its cement capacity to 73.6 million tonnes per annum (MTPA) from the current 67.5 MTPA. With the ongoing capital expenditure of 14 MTPA and with commissioning of 5.5 MTPA capacity at Dahej and Ametha by Q2 of FY24, the Adani Group's capacity will be 101 MTPA by 2025.
"By joining hands with SIL, Ambuja is poised to expand its market presence, strengthen its product portfolio, and reinforce its position as a leader in the construction materials sector. With this acquisition, the Adani Group is well on course to achieve its target of 140 MTPA of cement manufacturing capacity by 2028 ahead of time," says Gautam Adani, chairman of the Adani Group.
"With SIL's limestone reserves of a billion tonnes, ACL will increase cement capacity at Sanghipuramto 15 MTPA in the next two years. ACL will also invest in expanding the captive port at Sanghipuram to handle larger vessels. Our aim is to make SIL lowest cost producer of clinker in the country," Adani says.
Sanghi Industries integrated manufacturing unit at Sanghipuram in Gujarat's Kutch district is India's largest single-location cement and clinker unit by capacity. With 2,700 hectares of land, the integrated unit has two kilns with a clinker production capacity of 6.6 MTPA and a cement grinding unit with a capacity of 6.1 MTPA. It has a captive power plant of 130 megawatt and a Waste Heat Recovery System of 13 MW. The unit is also connected with a captive jetty at Sanghipuram.
"Given the Adani Group's strength in building and operating marine infrastructure, the port at Sanghipuram will be expanded to handle vessel sizes of 8,000 DWT (deadweight tonnage). Bulk terminals and grinding units will be created along the western coast to enable movement of clinker and cement through the sea route at the lowest possible cost," the statement says.
Sanghi Industries also has a bulk cement terminal at Navlakhi Port in Gujarat and Dharamtar Port in Maharashtra. Most of the cement is transported through the sea route. The cement producer has a network of 850 dealers, with a market presence in Gujarat, Madhya Pradesh, Rajasthan, Maharashtra and Kerala.
Ambuja Cements consolidated net profit jumped 31% year-on-year to ₹1,135 crore for the quarter ended June as against ₹865 crore in the corresponding quarter of the previous year. Revenue from operations rose 8.4% year-on-year to ₹8,713 crore in the April-June quarter as against ₹8,033 crore in the year-ago period.