Adani-led Ambuja Cements completes acquisition of Penna Cement Industries

Ambuja Cements' board of directors had approved the acquisition of 100% stake in Penna Cement at an enterprise value of Rs 10,422 crore in June, expanding the firm's southern footprint

Ambuja Cements Limited, a subsidiary of Adani Cement, has completed its acquisition of Penna Cement Industries Limited (PCIL) as of 16 August, 2024, the company said in an exchange filing. With this acquisition, Penna Cement has officially become a subsidiary of Ambuja Cements, bolstering its capacity and market presence, particularly in southern India and marking a significant milestone in Adani Group’s strategic expansion in the cement sector.

Ambuja Cements’ board of directors had approved the acquisition of 100 per cent stake in Penna Cement at an enterprise value of Rs 10,422 crore. This move aligns with Ambuja’s ambitious goal of reaching a cement production capacity of 140 million tonnes per annum (MTPA) by 2028, further establishing its position as a leading player in India’s cement industry.

Penna Cement’s strategic advantage

Penna Cement, with its strategically located assets and ample limestone reserves, offers Ambuja Cements a robust platform to enhance its production capabilities. Currently, PCIL operates with a cement capacity of 14 MTPA, of which 10 MTPA is already operational. The remaining 4 MTPA capacity, under construction at sites in Krishnapatnam and Jodhpur, is expected to be completed within the next six to 12 months.

A significant advantage of this acquisition is PCIL’s infrastructure, including its bulk cement terminals (BCTs), which will enable Ambuja to tap into the eastern and southern regions of India, and potentially extend its reach to Sri Lanka via sea routes.

Additionally, the surplus clinker from the Jodhpur plant is poised to support an additional 3 MTPA of cement grinding capacity, further expanding production potential beyond the current 14 MTPA.

Adani Group’s expansion into cement sector

Ambuja Cements, which operates under the umbrella of Adani Cement, already holds a production capacity of 77.4 MTPA through its network of 18 integrated plants and 18 grinding units across the country.

This group has also recently invested Rs 1,600 crore for a new grinding unit in Bihar. 

All this is part of Adani Cement’s aggressive growth strategy as it aims to surpass its current standing as India’s second-largest cement producer, trailing only UltraTech Cement of the Aditya Birla Group.

As earlier reported by Business Standard, the company has earmarked nearly $3 billion for acquisitions in this sector, eyeing firms such as Gujarat’s Saurashtra Cement, Jaiprakash Associates’ cement business, and Vadraj Cement owned by ABG Shipyard.

The Adani Group has set a clear target: to capture 20 per cent of the Indian cement market by the 2028 financial year. With a focus on maintaining a debt-free status while executing its accelerated capital expenditure programme, Ambuja Cements is well on its way to achieving a production capacity of 140 MTPA by FY2028, representing a 16 per cent annual growth rate.