Ambuja Cement’s Acquired Penna Cement: Penna Cement has been acquired by Ambuja Cements. Due to this the share price of Adani Group company Ambuja Cement has increased 3 times.
Adani Group company Ambuja Cement has acquired Penna Cement Industries Limited (PCIL) for Rs 10,422 crore. The Penna Cement deal will increase Adani Group’s market share in southern India. Due to this, Ambuja Cements will increase its influence in Sri Lanka. Where PCIL is present through one of its local subsidiaries.
Ambuja Cement’s Share Price
Ambuja Cement’s Share price fell by Rs 4.20 to close at Rs 664.30. The 52 weeks high of this share is Rs 680.20. Whereas, the 52-week low is Rs 404. The market cap of the company closed at Rs 1,63,625.29 crore today. The company has set a target of increasing its capacity to 140 million tonnes per year by the year 2028 and increasing the market share to around 20 percent.
Adani Group had entered the cement business by acquiring Ambuja Cement’s from Swiss company Holcim in September 2022. Ambuja Cement’s also holds 51 percent stake in ACC Limited.
The company had also acquired Saurashtra-based Sanghi Industries Limited last December for an enterprise value of Rs 5,185 crore. PCIL, established in the year 1991, had an integrated turnover of Rs 1,241 crore in the financial year 2023-24. Apart from South India, it also does business in Sri Lanka through its subsidiary.
What will Ambuja Cement’s benefit from buying Penna Cements?
By buying Penna Cement’s, Adani Group’s dominance in the cement industry will increase. Ambuja Cements has set a target of 140 million tonnes of cement production capacity by the financial year 2027-28. To achieve this target, it was necessary to buy Penna Cements Industries. Both companies have signed an agreement for the acquisition.
Under this agreement, Ambuja Cement’s will buy 100 percent shares of the company from Penna Cements Company’s promoter group P Pratap Reddy and family. Ambuja Cement’s will also get huge reserves of limestone from this deal. The acquisition of Penna Cement will increase the cement production capacity of Adani Group by 14 million tonnes per annum. With this, the total cement production capacity of Adani Group will increase to 89 million tonnes per annum.
Chief Executive Officer (CEO) and Whole Time Director of Ambuja Cement’s Ajay Kapoor termed it as an ‘important step’ in the company’s fast-growing journey and said, “By acquiring PCIL, Ambuja is ready to increase its market share in South India and strengthen its position as a leader in the cement industry at the all-India level.”
Penna Cement has a total production capacity of 14 million tonnes per annum in Andhra Pradesh, Telangana and Rajasthan. Out of this, 10 million tonnes of capacity is in operation while 4 million tonnes of capacity is under construction. By purchasing Penna Cements, Ambuja Cements will also benefit the marine transport logistics of Adani Group. Under this, five bulk cement terminals will be opened in Kolkata, Karaikal, Kochi, Colombo and Gopalpur to serve the coastal areas of India.
By purchasing Penna Cements, Ambuja Cements will increase the Adani Group’s share in the cement market in North India by two percent. While the share in South India will increase by eight percent. The company has set a target to complete this deal in the next three to four months. But this deal will completely depend on the approvals of government bodies and their officials.
How much will the production capacity of Ambuja Cements increase ?
With the merger of Penna Cements with Ambuja Cement’s, the production capacity of Adani Group will exceed 8.9 crore tonnes. Let us tell you that Penna Cement has a production capacity of 1.4 crore tonnes per annum in Andhra Pradesh, Telangana and Rajasthan (under construction). Along with this, when work starts in Penna Cement’s Jodhpur factory, the capacity to produce an additional 30 lakh tonnes of blocks of cement will be created.
This acquisition will also strengthen the maritime transport logistics of Adani Group. Under this, five bulk cement terminals will be opened in Kolkata, Gopalpur, Karaikal, Kochi and Colombo to serve peninsular India. According to the statement, this acquisition will increase the all-India share of Adani Group in the cement market by two percent and eight percent in South India.
