Ambuja Cement, a key player in the cement and building materials sector and part of the diversified Adani Group, has officially announced the finalization of a binding agreement to acquire Penna Cement Industries Ltd (PCIL).
Key highlights :
- Ambuja Cement has finalized a binding agreement to acquire a 100% stake in PCIL, marking a significant move towards achieving its target capacity of 140 MTPA by 2028.
- PCIL currently operates with a capacity of 14 MTPA across Andhra Pradesh, Telangana, and Rajasthan (with construction ongoing).
- Utilizing surplus clinker from the Jodhpur plant, an additional 3 MTPA cement grinding capacity will be supported.
- The acquisition strengthens Adani Cement’s sea transportation logistics, with five bulk cement terminals strategically located at Kolkata, Gopalpur, Karaikal, Kochi, and Colombo, catering to peninsular India.
- Adani Cement’s market share across India is expected to increase by approximately 2%, and in south India by approximately 8%.
- Funding for the acquisition will be sourced from internal accruals.
This acquisition, valued at Rs. 10,422 crore, involves Ambuja Cement acquiring 100% of PCIL’s shares from its current promoter group, Mr. P. Pratap Reddy and family. The entire acquisition will be financed internally through accrued funds.
Mr. Ajay Kapur, the CEO & Whole Time Director of Ambuja Cement, emphasized the significance of this acquisition in Ambuja Cement’s growth trajectory. With the addition of PCIL, Ambuja Cement aims to expand its market footprint in southern India and strengthen its position as a leading cement producer across India. PCIL’s strategic location and substantial limestone reserves offer opportunities for capacity expansion through debottlenecking and additional investments.
Additionally, the acquisition of PCIL brings access to bulk cement terminals (BCTs), which will facilitate market penetration into eastern and southern regions of peninsular India, as well as an entry point into Sri Lanka via sea routes.
Ambuja Cement’s objective is to enhance PCIL’s competitiveness in terms of cost and productivity while improving its operational performance. PCIL currently boasts a cement capacity of 14 MTPA, with 10 MTPA already operational.
The remaining capacity is under construction at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA), slated for completion within 6 to 12 months. Approximately 90% of PCIL’s cement capacity is equipped with railway sidings, and some units are supported by captive power plants and waste heat recovery systems. Moreover, surplus clinker at the Jodhpur plant will facilitate an additional 3 MTPA cement grinding capacity, supplementing the existing 14 MTPA capacity.