Adani Group completes Sanghi Industries acquisition

6 Dec 2023 , 10:57 AM

Ambuja Cements Ltd, owned by Gautam Adani, declared on Tuesday that the acquisition of Sanghi Industries Limited (SIL) had been completed, with a revised offer price of Rs 121.90 per share. Ambuja Cements Ltd. (ACL) made an offer to buy 26% of the equity shares of Sanghi Industries at a price of Rs. 114.22 a share from the company’s public shareholders earlier in August of this year.

‘In terms of the company’s obligations under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (‘Takeover Regulations’), the offer price as defined in the PA shall stand revised to Rs 121.90,’ Ambuja Cements stated in a regulatory filing.

In the meantime, on Tuesday afternoon, shares of Sanghi Industries were trading at Rs 129.90, which is 6.56% more than the amended offer price.

At an enterprise value of Rs 5,185 crore, ACL ‘successfully completes acquisition of Sanghi Industries, funded entirely through internal accruals,’ according to a separate statement from the company.

‘With the acquisition funded entirely through internal accruals, ACL holds a controlling stake of 54.51% in SIL,’ it stated.

As a result, ACL—which also controls ACC Ltd.—can now produce up to 74.6 MTPA (million tonnes per year) more than it could have previously.

‘With this acquisition and by raising capacity to 15 MTPA throughout the West Coast markets with states of Gujarat, Maharashtra, Karnataka, and Kerala at a very competitive cost based on SIL’s strength of low-cost clinker, ACL will increase its coastal footprint.’ Over the following 30 months, this additional capacity will be put into service,’ it stated.

ACL had said on August 3, 2023, that it would buy 14.65 crore shares of Sanghi Industries, or 56.74% of the firm.

It purchased 14.08 crore Sanghi Industries shares from the promoters for Rs 121.90 per equity share, as stated in the share purchase agreement. While 2.23% of the promoter group’s remaining 57.56 lakh shares will be purchased separately at the same price, said ACL.

At Sanghipuram in Gujarat’s coast, SIL operates an integrated manufacturing facility over 2,700 hectares. It features the biggest cement and clinker producing capacity in India located in a single location.

This facility includes a cement grinding unit with a capacity of 6.1 MTPA, two kilns with an amazing 6.6 MTPA clinker output capacity, a 13 MW captive power plant, and an effective 13 MW waste heat recovery system.

Moreover, Adani Ports and Special Economic Zones (APSEZ) CEO Karan Adani stated on 3 August while announcing the transaction that the company has a captive jetty in Sanghipuram, in which the Adani group intends to invest to enhance the captive port capacity of to handle vessel sizes of 8,000 DWT (deadweight tonnage).

‘The acquisition of SIL, with its billion-tonne high quality surface mining limestone reserves, positions ACL to expedite its unique coastal strategy, aiming to increase the cement capacity to 15 MTPA along the West Coast on the strength of SIL’s low-cost clinker,’ according to ACL. The ‘initiative will leverage the strengths of Ambuja and ACC brands.’

It further stated that ACL will make investments to enlarge the current captive port in Sanghipuram to accept larger vessels in order to service the growing demand for cement at reasonable prices throughout Kerala, Gujarat, Maharashtra, and Karnataka.

‘This is expected to be commissioned over next 30 months,’ it read.

The CEO of Adani’s Cement Business, Ajay Kapur, stated that this acquisition is a major step towards securing Adani Group’s dominance in the cement market in India.

‘We are happy to have Sanghi Industries staff members join the Adani family and are eager to take advantage of the advantages this transaction provides. Plans are afoot to increase the Sanghipuram port’s ability to accommodate larger boats in recognition of the Adani Group’s proficiency in marine infrastructure, enabling the reasonably priced shipping of cement and clinker by sea,’ he stated.

With a consolidated capacity of 137.85 million tonnes per annum (MTPA), Aditya Birla Group company UltraTech Cements is the top cement manufacturer, followed by Ambuja Cements.

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