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Gautam Adani-promoted Ambuja Cements on Monday said it has entered into an agreement to acquire a grinding unit in Tamil Nadu for Rs 413.75 crore, to expand its footprint in the South Indian market.
In a statement, Ambuja Cements said it has signed a definitive agreement to acquire the 1.5 million tonnes per annum (MTPA) capacity unit located in Tuticorin from My Home Industries.
Ambuja said this acquisition is funded by internal accruals and will take the group’s cement capacity to 78.9 MTPA.
The acquisition will aid in enhancing the company’s coastal footprint across southern markets of Tamil Nadu and Kerala.
The statement added that the limited availability of limestone (a key raw material in cement production) in Tamil Nadu presents a unique competitive advantage for the grinding unit with coastal movement of clinker from the Sanghipuram plant ensuring cost-efficient operations. Ambuja Cements acquired the Sanghipuram plant from Sanghi Industries last financial year.
Ajay Kapur, chief executive officer (CEO) at Adani Cement said, “Ambuja Cements will also inherit the existing dealer network and retain current employees, facilitating a smooth transition and enabling a rapid ramp-up in utilisation.”
At present, Adani sells 10 per cent of its cement volumes in South India, its smallest market so far.
Monday’s acquisition announcement comes at a time when competitors — UltraTech Cement, Dalmia Bharat and Shree Cement — are all adding fresh cement capacities in South India.
According to industry analysts, a slew of central and state government projects have turned cement makers’ interest towards South India.
