Ambuja Cements board OK's merger with Sanghi Inds, Penna Cement

Ambuja Cements announced that its board has approved the merger of Sanghi Industries (SIL) and Penna Cement Industries (PCIL) with itself.

Sanghi Industries operates a large, fully integrated cement plant in Kutch, Gujarat, which includes a 6.6 MMTPA clinker plant, a 6.1 MMTPA cement plant, and a 130 MW captive power plant, among other facilities. Both Sanghi and Ambuja Cements are part of the Adani Group. Its revenue was Rs 821.35 crore in FY24..

Penna Cement Industries operates four integrated plants in Andhra Pradesh and Telangana, along with a grinding unit in Maharashtra, with an operational capacity of 10 MTPA. Additionally, two plants with a capacity of 2 MTPA each are under construction in Krishnapatnam and Jodhpur, expected to be completed within the next 8-12 months. Penna Cement also owns five bulk cement terminals in Kolkata, Gopalpur, Karaikal, Kochi, and Colombo (Sri Lanka).

 

Ambuja Cements holds 58.08% in Sanghi Industries and 67.53% in Penna Cement Industries.

The scheme will enable the Ambuja Cements to integrate the Sanghi Industries and Penna Cement Industries operations, leading to more efficient and economical business management. This includes better resource utilization, reduced overheads, cost savings, economies of scale, elimination of duplicated efforts, and streamlined compliance requirements through amalgamation.

For every 100 equity shares of SIL with a face value of Rs 10 each, Ambuja Cements will issue 12 equity shares with a face value of Rs 2 each, to eligible shareholders of SIL.

The said scheme of amalgamation will be expected to be completed within 9-12 months.

Ajay Kapur, CEO, Cement Business, Adani Group, said, This merger aims to make our company more competitive and efficient, ultimately enhancing shareholder value. Enhanced working capital management and internal funds will support the growth of our business operations. Unified cash flow management will pool resources for faster expansion and cost savings in administration and governance, thereby simplifying compliance requirements. This advancement through a larger entity will increase market competitiveness and deliver greater value to our shareholders.

Ambuja Cements is a major cement producing company in India. The principal activity of the company is to manufacture and market cement and clinker for both domestic and export markets.

The cement majors consolidated net profit slipped 52.1% to Rs 472.89 crore in Q2 FY25 as against Rs 987.24 crore recorded in Q2 FY24. However, revenue from operations rose 1.24% YoY to Rs 7,516.11 crore in the quarter ended 30 September 2024.

Shares of Ambuja Cements fell by 1.11% to Rs 564.60. Meanwhile, Sanghi Industries saw a sharp decline of 11.15%, with its shares dropping to Rs 68.34 on the BSE.

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