Adani's Ambuja Cement acquires Penna Cement for ₹10,422 cr

Adani Group’s Ambuja Cements announced the acquisition of Penna Cement Industries Ltd (PCIL) for ₹10,422 crore, according to a release issued by the Adani group. The deal, sealed through a binding agreement, sees Ambuja taking over PCIL entirely from its current owners, the P. Pratap Reddy family.

PCIL brings to the table a substantial cement capacity of 14 MTPA, with 10 MTPA already operational, and the remaining 4 MTPA is under construction at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA) and will be completed within 6 to 12 months, as stated by the company.

Adani says its around 90% of the cement capacity comes with railway sidings, and some are backed by captive power plants and waste heat recovery systems. Moreover, it mentions that the surplus clinker at the Jodhpur plant would facilitate an additional 3 MTPA cement grinding capacity on top of the existing 14 MTPA.

The company states that it will strengthens Adani Cement’s Sea transportation logistics with five bulk cement terminals at Kolkata, Gopalpur, Karaikal, Kochi and Colombo to serve peninsular India.

“Acquisition adds 14 MTPA capacity, total now 89 MTPA,” the company says.

Ajay Kapur, CEO & Whole Time Director of Ambuja Cement, says, “By acquiring PCIL, Ambuja is poised to expand its market presence in south India and reinforce its position as a pan-India leader in the cement industry. PCIL’s strategic location and sufficient limestone reserves provide an opportunity to increase cement capacity through debottlenecking and additional investment."

He says the bulk cement terminals (BCTs) will prove to be a gamechanger by giving access to the company to the eastern and southern parts of peninsular India, apart from an entry to Sri Lanka, through the sea route.

In the March quarter of FY24, Ambuja Cements saw a substantial 63.8% year-on-year surge in consolidated net profit, reaching ₹1,055 crore attributable to owners, compared to ₹644 crore in the same period a year ago. The company's revenue for the quarter also showed a notable 11.6% increase, totaling ₹8,893.99 crore compared to ₹7,695.98 crore in the corresponding period of the previous fiscal year. Additionally, Ambuja Cements experienced a sales volume growth of 17%, with 16.6 million tonnes sold during the quarter, compared to 14.1 million tonnes in the March quarter of FY23.

In the quarter being assessed, the cement company's overall income reached ₹9,127.45 crore, marking a 10.6% increase from ₹8,250.45 crore in the March quarter of FY23. The operating EBITDA (earnings before interest, tax, depreciation, and amortization) for the company amounted to ₹1,699 crore, compared to ₹1,239 crore in the corresponding period a year ago.