MUMBAI: Ambuja Cements, part of Adani Group, on Thursday announced acquisition of Sanghi Industries Ltd (SIL) at an enterprise value of Rs 5,000 crore. The mega deal, in which country’s second biggest cement maker will acquire 56.74 percent shares of promoters of SIL, will help the company to reach its goal of doubling its capacity ahead of time and close the gap with its competitor UltraTech Cement - largest cement producer in India.
The acquisition will help Ambuja Cements, a part of Adani Cement, to become lowest cost producer of cement as Gujarat-based SIL has limestone reserves of 1 billion tonne, which is a key element in cement manufacturing. The acquisition will also help Ambuja Cements to take the low cost cement to newer markets in South Gujarat, Maharashtra, Karnataka and Kerala via sea by using Sanghi Industries’ captive port.
“By joining hands with SIL, Ambuja is poised to expand its market presence, strengthen its product portfolio, and reinforce its position as a leader in the construction materials sector. With this acquisition, the Adani Group is well on course to achieve its target of 140 MTPA (million tonnes per annum) of cement manufacturing capacity by 2028 ahead of time,” said Gautam Adani, Chairman of the Adani Group in a statement.
The acquisition will take care of backward integration of Adani Group’s other businesses. “Adani Group companies which operate in energy, real estate, ports and logistics business require cement as input. With this acquisition, the group has ensured that its related entities get uninterrupted supply of low cost cement,” a Mumbai based analyst with a brokerage firm told this newspaper.
Sanghi Industries has a clinker capacity of 6.6 MTPA and a cement capacity of 6.1 MTPA, including limestone reserves of 1 billion tonne, a captive jetty and power plant. Ambuja Cements plans to increase this capacity to 15 MTPA in next two years and invest in expanding Sanghi’s captive port capacity to handle larger vessels of 8,000 DWT (deadweight tonnage).
“Our vision is to produce lowest cost clinker in the country at Sanhipuram and then transport this clinker as well as bulk cement through coastal roads to the markets of Saurashtra South Gujarat, Mumbai and Mumbai Metropolitan Region Karnataka and Kerala,” said Karan Adani, CEO, Adani Ports and Special Economic Zones. As per the terms of deal, Ambuja Cement will make an offer to acquire another 26 percent or 6.71 crore equity shares from SIL’s public shareholders. If the open offer is fully subscribed, Ambuja Cements will own 82.74% in SIL.