Adani on deal street again as Ambuja snaps up Penna Cement for Rs 10,422 crore

The Adanis entered the cement business in August 2022 by acquiring the stakes held by the Swiss major Holcim in Ambuja Cements and its subsidiary ACC for $6.4 billion of which $4.5 billion were raised in debt.

Of the $4.5 billion debt funded deal, the billionaire Gautam Adani-controlled group had already refinance $3.5 billion loan as of October 2023 from ten international banks such as Deutsche Bank, Standard Chartered Bank, Barclays, Citibank, MUFG Bank, Sumitomo Mitsui Banking Corp and other lenders.

Late last year, Ambuja Cements had acquired a 56.74 percent stake in the Gujarat-based cement maker Sanghi Industries, valuing the latter at Rs 5,000 crore.

“By acquiring Penna, Ambuja is poised to expand its market presence in the South and reinforce its position as a pan-India leader. Penna’s location and sufficient limestone reserves provide an opportunity to increase cement capacity through debottlenecking and additional investment.

Importantly, the bulk cement terminals 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. Our aim is to make Penna highly competitive on cost and productivity and improve its operating performance,” Kapur said.

The group has set an internal target of jacking up its cement capacity to 140 mtpa from the present 79 mtpa and ramp up its market share from the present 14 percent to 20 percent or more.

Penna has 14 mtpa capacity of which 10 mtpa is operational now, this totals Adani’s capacity to 89 mtpa now and is a forward step towards its target capacity of 140 mtpa by 2028, the group said in a statement, adding the deal increases Adani Cement’s market share by 2 percentage points to 16 percent.

The 4 mtpa capacity is coming up at Krishnapatnam in Andhra (2 mtpa) and Jodhpur (2 mtpa) and will be completed over the next months.

Penna’s 14 mtpa capacities are in Andhra, Telangana and Rajasthan which is under-construction and the surplus clinker at the upcoming Jodhpur plant will support additional 3 mtpa cement grinding capacity.

The deal also strengthens Adani Cement’s sea transportation logistics with five bulk cement terminals at Kolkata, Gopalpur, Karaikal, Kochi and Colombo, the statement added.

Ambuja with its subsidiaries ACC and Sanghi Industries has taken the Adani Cement capacity to 78.9 mtpa, with 18 integrated cement manufacturing plants and 19 cement grinding units.