The Adani group continued its shopping spree in cement with the acquisition of Penna Cement Industries Ltd (PCIL) at an enterprise value of ₹10,422 crore.
Adani’s announcement on Thursday comes amid reports it has prepared a war chest of $3 billion to acquire small and mid-sized cement companies in a bid to dethrone UltraTech Cement, India’s largest cement maker.
The Aditya Birla group firm is also maintaining a flurry of expansion and acquisitions to maintain it top position in the industry.
Adani-owned Ambuja Cements Ltd is acquiring Penna Cement. In a regulatory filing, it said it will acquire 100 per cent shares of PCIL from existing promoter group, P. Pratap Reddy and family, with the deal funded by internal accruals.
PCIL will add 14 million tonnes (mt) capacity to Adani’s kitty, of which 10mt is operational. The remaining are under construction at Krishnapatnam in Andhra Pradesh (2mt) and Jodhpur, Rajasthan (2mt). Ambuja Cements said they will be completed within 6-12 months.
PCIL’s operational capacities are largely across Andhra Pradesh and Telangana as the acquisition solidifies the conglomerate’s presence in Southern India.
``This landmark acquisition is a significant step forward in Ambuja Cement’s accelerating growth journey. 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. PCIL’s strategic location and sufficient limestone reserves provide an opportunity to increase cement capacity through debottlenecking and additional investment,’’ Ajay Kapur, CEO and wholetime director, Ambuja Cements, said.
In September 2022, the Adani group had completed the acquisition of Holcim India’s cement business making it the second largest player in one go.
Since then the conglomerate has largely resorted to acquisitions to expand its presence.
Adani has laid a vision to achieve 140mt capacity and around 20 per cent market share by 2028.
A media report said the conglomerate is looking
to acquire multiple cement companies which include Gujarat headquartered Saurashtra Cement, the cement business of Jaiprakash Associates and ABG Shipyard-owned Vadraj Cement — at a time the new Modi government is expected to continue with its focus on the infrastructure sector.
After the latest acquisition, the total production capacity of Adani Cement would climb up to 89mt. It would also provide sufficient limestone reserves to Ambuja Cement.
The company expects to complete the acquisition within three–four months.
Birla drive
Aditya Birla Group’s UltraTech Cement had announced the commissioning of two greenfield capacities totalling 5.4mt in Chhattisgarh and Tamil Nadu, taking the company’s cement capacity to 151.6mt.
It also acquired a grinding unit in Maharashtra — this coupled to its ongoing expansion projects of 36.2mt across locations and the proposed acquisition of Kesoram Cement is expected to take cement capacity to 199.6mt, including 5.4mt overseas.
