Ambuja acquires Penna Cement for Rs 10,422 crore

Co says indicative time period for completion of deal is three-four months, will be fully funded via internal accruals
Image used for representational purposes only
Image used for representational purposes only

MUMBAI: Adani group-owned Ambuja Cements has acquired 100% equity from the promoters of the Hyderabad-based Penna Cement — P Pratap Reddy and family — for Rs 10,422 crore, as the ports-to-airports-to-energy conglomerate seeks to ramp up its cement play, which began in 2022 with the acquisition of Ambuja Cements and ACC.

In an exchange filing on Thursday, . The move will increase the already competitive cement market, which is currently dominated by the Birlas-owned Ultratech with an annual capacity of 146 million tonne, while Adani’s current capacity is just half of that at about 79 mtpa across 18 plants, which gives it a 14% market share.

With 550 mtpa capacity, the country is the second-largest cement maker in the world after China’s 1.5 billion tonne as of 2022. Adani groupsaid the entire acquisition cost will be met via internal accruals.

Ambuja will acquire 100% shares of Penna from its promoter group P Pratap Reddy and family. The acquisition will be fully funded through internal accruals, said the cash-rich company that is also fully debt-free. As of March 2024, it was sitting on a cash pile of over Rs 24,300 crore and had a Rs 8,300 crore warranty money from the promoters.

“The acquisition is a significant step forward in Ambuja Cement’s accelerating growth journey,” said Ajay Kapur, CEO, Ambuja Cements. Penna’s consolidated turnover for the last three years stood at Rs 1,241 crore (FY24), Rs 2,002 crore (FY23 and Rs 3,204 crore in FY22, he said.

Penna Cement was incorporated in October 1991 in Hyderabad, and has cement manufacturing in Sri Lanka as well apart from the domestic market, directly and via its subsidiaries. It has an installed capacity of 10 mtpa now and is reportedly adding 5.5 mtpa.

The Adanis entered the cement business in August 2022 by acquiring stakes of Swiss Holcim in Ambuja Cements and its subsidiary ACC for $6.4 billion, of which $4.5 billion were raised in debt.

Of the $4.5 billion debt funded deal, the billionaire Gautam Adani-controlled group had already refinanced $3.5 billion loan as of October 2023 from 10 international banks such as Deutsche Bank, Standard Chartered Bank, Barclays, Citibank, MUFG Bank, Sumitomo Mitsui Banking Corp and other lenders.

Late last year, Ambuja had acquired 56.74% stake in Gujarat-based Sanghi Industries, valuing the latter at Rs 5,000 crore. The group has set an internal target of jacking up its cement capacity to 140 mtap from the present 79 mtpa and ramp up its market share from the present 14% to 20% or more.

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