Ambuja Cements, a part of the Adani Group, announced its plan to acquire 100 percent stake in Penna Cement Industries Ltd (PCIL) for an enterprise value of Rs 10,422 crore. This acquisition is aimed at bolstering Adani’s capacity to 140 million tonnes per annum (MTPA) by 2028. The transaction, expected to be completed within 3 to 4 months, involves purchasing the stake from PCIL’s promoter group, P Pratap Reddy and family, and will be financed through internal accruals.
Adani’s strategic goal is to secure a 20 percent market share by FY28, given the robust demand for cement in India. Acquiring PCIL enables Ambuja to strengthen its presence in South India, further solidifying its position as a leading cement player across India.
What did the move by Ambuja entail?
This move follows Ambuja’s earlier agreement to acquire a grinding unit in Tamil Nadu for Rs 413.75 crore, aimed at expanding its footprint in the South Indian market. The acquisition of PCIL is expected to leverage the company’s strategic location, ample limestone reserves, and bulk cement terminals (BCTs), facilitating access to the eastern and southern regions of peninsular India. Additionally, it opens up opportunities for Adani Group’s entry into Sri Lanka via sea routes.
At present, PCIL possesses a total installed cement production capacity of 10 million tonnes per annum (MTPA), distributed across four integrated manufacturing facilities and two grinding units located in Andhra Pradesh, Telangana, and Maharashtra. Moreover, there are ongoing construction projects for additional capacity, with 4 MTPA being added at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA), expected to be completed within 6 to 12 months.
Approximately 90% of PCIL’s cement capacity is equipped with railway sidings, and some facilities benefit from captive power plants and waste heat recovery systems. Additionally, surplus clinker at the Jodhpur plant will facilitate an additional 3 MTPA cement grinding capacity on top of the existing 14 MTPA, as per the filing.
Ambuja stated in a press release that the existing dealers associated with PCIL will transition to Adani Cement’s market network, fostering significant synergy.