Adanis Strengthen Southern Presence With Rs 10,422 Crore Acquisition Of Hyderabad's Penna Cement

Adani Group on 13 June announced the signing of a binding agreement for the acquisition of Penna Cement Industries Ltd (PCIL) at an enterprise value of Rs 10,422 crore, expanding the group's presence in the south.

According to the stock exchange filing, Ambuja Cements Limited (ACL), the cement and building material company of the diversified Adani Group, will acquire 100 per cent shares of PCIL from its existing promoter group, P Pratap Reddy and family.

The acquisition, to be fully funded through internal accruals, will improve Adani Cement’s market share pan India by around 2 per cent and 8 per cent in south India.

Hyderabad-based Penna has an annual production capacity of 14 million tonnes per annum (MTPA). Of the overall capacity, 10 MTPA is operational, and the remaining is under construction at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA) and is expected to be completed in 6 to 12 months.

About 90 per cent of the cement capacity comes with railway sidings, and some are supported by captive power plants and waste heat recovery systems.

“PCIL’s strategic location and sufficient limestone reserves provide an opportunity to increase cement capacity through debottlenecking and additional investment," said Ambuja Cements CEO Ajay Kapur.

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 added.

Ambuja's latest acquisition marks its fourth merger and acquisition (M&A) activity since Adani's entry into the sector through the former in September 2022.

The purchase of Penna will significantly enhance Adani Group's cement capacity to 89 million tons, aligning with its ambitious target of reaching 140 million tons by 2028. This positions Adani as the second-largest player in India, trailing only UltraTech Cement Limited, a flagship of the Aditya Birla group, which leads with a capacity of 151.6 MTPA.

Globally, UltraTech Cement now commands 150 per cent of the United States' capacity and 80 per cent of Europe's capacity, solidifying its position as the third-largest cement producer worldwide. UltraTech has set a new goal of achieving a production capacity of 200 MTPA.