Ambuja Cements Inks Acquisition Deal with Hyderabad's Penna

14 Jun 2024 , 09:52 AM

At an enterprise value of ₹10,422 Crore, Ambuja Cement, a division of the Adani Group, will buy Hyderabad-based Penna Cement, increasing its capacity and market position in southern India. Ambuja Cement, with its headquarters in Mumbai, said in a stock exchange filing that it will buy all of Penna Cement from the current promoter group, P Pratap Reddy and family.

Reports estimate that Penna Cement owes about ₹3,000 Crore in debt, which includes inter-corporate deposits, fund debt, and non-fund debt.

Ambuja Cement would set aside about ₹3,500 Crore of the enterprise value as milestone payments when Penna’s Rajasthan plant’s 3 MT clinker facility and 2 million MT cement capacity are completed, perhaps within a year.

Following the promoter’s April 2024 infusion of ₹8,339 Crore through warrants, Ambuja Cement has ₹24,338 Crore in cash and cash equivalents.

The Adani Group’s overall capacity will reach 89 MTPA following the acquisition of Penna Cement, speeding its approach towards its 2028 goal of 140 MTPA. The acquisition, according to the business, “will improve Adani Cement’s market share pan India by ~2%, south India by ~8%”.

Ajay Kapur, CEO and full-time director of Ambuja Cement, stated in the statement that the company is “positioned to expand its market presence in south India and reinforce its position as a pan-India leader in the cement industry by acquiring PCIL (Penna Cement Industries Ltd).” “PCIL’s strategic location and sufficient limestone reserves provide an opportunity to increase cement capacity through debottlenecking and additional investment.”

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