The Adani Group, under its cement subsidiary Ambuja Cements, has taken a bold step to consolidate its position in the Indian cement industry. By merging Sanghi Industries and Penna Cement, the group aims to strengthen its operational efficiency and achieve its ambitious expansion targets. This move underscores Adani’s vision of becoming a market leader in the cement sector.
Here’s an in-depth look at this strategic consolidation and what it means for stakeholders.
Also read: Mergers vs. Acquisitions – How are they different from one another?
What is the merger all about?
The merger combines Ambuja Cements’ two subsidiaries, Sanghi Industries and Penna Cement, into a single entity. As part of the arrangement:
- Sanghi Industries shareholders will receive 12 equity shares of Ambuja Cements (face value ₹2) for every 100 shares of Sanghi Industries (face value ₹10).
- Sanghi Industries, with 58.08% of equity held by Ambuja, will be fully integrated into the parent company.
This consolidation will boost Ambuja’s production capacity to over 100 MTPA (million tonnes per annum) by the end of FY25, compared to its current 89 MTPA. The company plans to scale this further to 140 MTPA by 2027-28.
Market reactions: A mixed bag
While the announcement triggered optimism for Ambuja Cements’ shareholders, the response was less favourable for Sanghi Industries.
- Ambuja Cements: Shares rose by 1.2%, hitting a high of ₹578.15 before closing at ₹570.95 on the BSE.
- Sanghi Industries: Shares plummeted by 12%, reaching a 52-week low of ₹67.42.
Sanghi Industries: A powerhouse addition
Sanghi Industries, a dominant player in Gujarat, brings significant assets to Ambuja:
- Clinker capacity: 6.6 MTPA
- Cement capacity: 6.1 MTPA
- Limestone reserves: 1 billion tonnes
Its Sanghipuram plant is India’s largest single-location cement and clinker unit, featuring a captive jetty and power plant, ensuring efficient operations.
You may also read: Mergers vs. acquisitions – How are they different from one another?
Penna Cement: Enhancing regional reach
Penna Cement, headquartered in South India, adds another 10 MTPA to Ambuja’s portfolio. With:
- Four integrated plants in Andhra Pradesh and Telangana
- A grinding unit in Maharashtra
- Two upcoming plants in Krishnapatnam and Jodhpur (2 MTPA each), scheduled for completion within 8–12 months
Penna also operates five bulk cement terminals in key locations, including Kolkata, Kochi, and Colombo, ensuring robust market penetration.
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Key benefits of the merger
1. Increased capacity and efficiency
The merger consolidates production assets, enabling Ambuja to exceed 100 MTPA by FY25 and enhancing cost efficiency through unified cash flow management.
2. Streamlined compliance
The consolidation simplifies compliance and governance, cutting administrative costs and enabling faster decision-making.
3. Shareholder value creation
Ajay Kapur, CEO of Adani Group’s cement business, highlighted how this merger enhances competitiveness and creates greater value for stakeholders.
Adani Group’s long-term vision for cement
The Adani Group has been making strategic acquisitions in the cement sector:
- Acquired Sanghi Industries in December 2023 for ₹5,185 crore.
- Took over Penna Cement in June 2024 for ₹10,422 crore.
- Acquired 46.8% equity in Orient Cement for ₹8,100 crore in October 2024.
With these moves, Ambuja Cements is now well-positioned to achieve its 140 MTPA capacity target by 2028.
Conclusion
The merger of Sanghi Industries and Penna Cement into Ambuja Cements represents a strategic leap forward for the Adani Group. By integrating assets and streamlining operations, the group is poised to redefine the Indian cement sector. For investors and stakeholders, this consolidation signals greater efficiency, stronger market presence, and a roadmap to sustained growth.
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