Ambuja Cements Acquisition of Penna Cement: A Strategic Move
Ambuja Cements, a prominent company within the Adani Group, has agreed to acquire Penna Cement Industries (PCIL) at an enterprise value of Rs 10,422 crore. The Ambuja Cements acquisition involves purchasing 100% of PCIL’s shares from the existing promoter group, led by P. Pratap Reddy and family. This transaction will be entirely funded through internal accruals.
The Ambuja Cements acquisition of Penna Cement is set to enhance Ambuja Cements’ market share by approximately 2% nationwide and about 8% in the southern region of India. According to Ajay Kapur, CEO & Whole-Time Director of Ambuja Cements, “Acquiring PCIL positions Ambuja to expand its presence significantly in South India. PCIL’s strategic location and substantial limestone reserves offer opportunities for capacity increases through debottlenecking and further investments. Notably, the bulk cement terminals (BCTs) will provide critical access to eastern and southern peninsular India and entry into Sri Lanka via sea routes. Our goal is to elevate PCIL’s competitiveness in cost efficiency and productivity, enhancing its overall operational performance.”
PCIL has a total cement capacity of 14 million tonnes per annum (MTPA), with 10 MTPA currently operational. The remaining capacity is being developed at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA), expected to be completed within 6 to 12 months. Around 90% of PCIL’s cement capacity benefits from railway sidings and is supported by captive power plants and waste heat recovery systems. Additionally, surplus clinker from the Jodhpur plant will enable an extra 3 MTPA cement grinding capacity, increasing the total capacity to 17 MTPA.
The Ambuja Cements acquisition of Penna Cement boosts Ambuja Cements’ total capacity to 89 MTPA, moving the company closer to its target of 140 MTPA by 2028. PCIL’s advantageous location and infrastructure will significantly enhance Ambuja Cements’ competitive position in the market.
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