Ambuja Cement Secures Penna Cement for ₹10,422 Crore: A Big Move to Boost Market Share in South India

mbuja Cement, part of the Adani Group, has entered into an agreement to purchase Hyderabad-based Penna Cement for Rs 10,422 crore. This acquisition is set to boost Adani Cement’s market share by 2% nationwide and about 8% in South India.

Deal Highlights

• Acquisition Agreement: Ambuja Cement will acquire 100% of Penna Cement’s shares from current owners P. Pratap Reddy and family.
• Funding: The acquisition will be financed through Ambuja Cement’s internal resources.
• Stock Exchange Filing: The deal details were disclosed in a filing to the stock exchanges.

Impact on Adani Cement

• Increased Market Share: The acquisition will increase Adani Cement’s market share in the Indian cement industry.
• Enhanced Capacity: The installed capacity will rise by 14 million tonnes per annum (MTPA), bringing Adani Cement’s total capacity to 89 MTPA, advancing towards a target of 140 MTPA by 2028.

Strategic Importance

Ajay Kapur, CEO & Whole-Time Director at Ambuja Cement, emphasised that Penna Cement’s strategic location and significant limestone reserves provide opportunities to enhance production through further investments. The acquisition will also leverage bulk cement terminals (BCTs) to gain access to the eastern and southern regions of peninsular India, and to Sri Lanka via the sea.

Expansion in South India

• South India Presence: Penna Cement’s facilities will strengthen Adani’s foothold in South India.
• Operational Capacity: Penna Cement has an operational capacity of 10 MTPA out of a total 14 MTPA, with ongoing projects in Krishnapatnam and Jodhpur expected to complete in the next 6-12 months.
• Bulk Terminals: The company operates bulk terminals in Kolkata, Gopalpur, Karaikal, Kochi, and Colombo, enhancing its logistics for peninsular India.

Financial Overview

• Revenue and Profit: Penna Cement reported revenues of Rs 3,204 crore and an operating profit of Rs 448.32 crore in FY22, with an EBITDA margin of 13.99%.
• Debt: The company had a debt of Rs 1,260 crore at the end of FY22.
• Future Financials: Financial data for periods beyond FY22 is not available in Penna Cement’s investor reports.

Broader Acquisition Strategy

The Economic Times previously reported that the Adani Group was exploring other acquisitions, including Gujarat-based Saurashtra Cement, the cement business of Jaiprakash Associates, and Vadraj Cement owned by ABG Shipyard.