Ambuja Cements Acquires Penna Cement Industries in Landmark Deal

Ambuja Cements, a prominent entity under the Adani Group umbrella, announced on Thursday its acquisition of a 100 percent stake in Penna Cement Industries Ltd (PCIL). This significant move, valued at Rs 10,422 crore, is a critical step in Ambuja Cements’ strategy to achieve a production capacity of 140 million tonnes per annum (MTPA) by the year 2028. The transaction underscores Adani Group’s ambitious expansion objectives within the cement and building materials sector.

The acquisition entails Ambuja Cements purchasing the entire stake from the Hyderabad-based promoter group of PCIL, specifically from P. Pratap Reddy and his family. Financing for this transaction will be managed internally, leveraging the company’s accrued resources. Once complete, this acquisition is projected to elevate Adani Cement’s market share across India by 2 percent. The impact will be even more pronounced in southern India, where it is expected to increase by 8 percent.

Ajay Kapur, CEO and Whole Time Director of Ambuja Cements, heralded the deal as a pivotal development in the company’s growth trajectory. “This landmark acquisition is a significant step forward in Ambuja Cement’s accelerating growth journey,” Kapur remarked. He further emphasized that acquiring PCIL will enhance Ambuja’s market penetration in southern India, concurrently strengthening its leadership position on a national scale within the cement industry.

Penna Cement Industries Ltd currently boasts a substantial cement production capacity of 14 MTPA, with 10 MTPA already operational. The remaining 4 MTPA capacity is being developed at two sites: 2 MTPA in Krishnapatnam and another 2 MTPA in Jodhpur. These facilities are expected to be fully operational within the next 6 to 12 months. PCIL’s strategic locations, coupled with its ample limestone reserves, present an opportunity to further bolster cement production through de-bottlenecking processes and additional investments.

Kapur highlighted the transformative potential of PCIL’s infrastructure, particularly noting the pivotal role of the bulk cement terminals (BCTs).

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. “Importantly, the bulk cement terminals (BCTs) will prove to be a game-changer by giving access to the eastern and southern parts of peninsular India, apart from an entry to Sri Lanka, through the sea route,” he explained.

Moreover, the existing dealer networks of PCIL will be integrated into Adani Cement’s extensive market network. This integration is anticipated to create considerable synergies, strengthening the company’s distribution capabilities and market reach.

The financial year 2024 has been a period of rapid expansion for the Adani Group in the cement sector. Apart from the high-profile acquisition of PCIL, Adani Group has completed three other significant acquisitions: Sanghi Cements, Asian Cements, and Gujarat Units (GU) in Tuticorin. These strategic moves have collectively increased Adani Cement’s production capacity by an impressive 11.4 million tonnes per annum, bringing the group’s total capacity to 78.9 MTPA.

In light of these developments, Ambuja Cements has reported a remarkable financial performance for the fiscal year 2024. The company’s profit after tax (PAT) surged to Rs 4,738 crore, marking an unprecedented year-on-year growth of 119 percent. Additionally, the operating earnings before interest, taxes, depreciation, and amortization (EBITDA) witnessed a substantial increase of 73 percent, reaching Rs 6,400 crore.

This acquisition reaffirms Adani Group’s commitment to scaling up its presence in the Indian cement industry and achieving substantial growth milestones. As Ambuja Cements continues to expand its footprint, stakeholders and industry observers will keenly watch how these strategic investments translate into market dominance and profitability. The integration of PCIL, with its strategically advantageous locations and robust production capabilities, positions the Adani Group to further solidify its market leadership and explore new market avenues, including international expansions.

This article highlights the meticulous planning and aggressive growth strategy of the Adani Group, which is steadily carving a niche for itself in the highly competitive cement and building materials industry. With continued focus on expansion and operational excellence, Ambuja Cements and the broader Adani Cement portfolio are poised for a promising future.