Ambuja Cements to merge Sanghi Industries, Penna Cement with itself

New Delhi: Adani Group entity Ambuja Cements will merge the acquired companies Saurashtra-based Sanghi Industries and Andhra Pradesh-based Penna Cement Industries with itself.

Ambuja Cements, on Tuesday, announced separate schemes of arrangement of its subsidiaries Sanghi Industries Limited (SIL) and Penna Cement Industries Limited (PCIL).

"This consolidation will help to streamline the organisation structure and simplify compliance requirements for effective governance," said a statement from the country's second-largest cement maker.

The board of Ambuja Cement in a meeting held on Tuesday approved the scheme of arrangement with Sanghi Industries and Penna Cement Industries.

The Adani group firm, which also owns ACC Ltd, said the amalgamation is subject to requisite approvals and expects the transaction to be completed within 9-12 months.

Ambuja Cements holds 58.08 per cent of the paid-up equity share capital of Sanghi Industries. It acquired the company in December 2023.

This will based on swap rationale and "for every 100 equity shares of SIL with a face value of Rs 10 each, Ambuja Cements will issue 12 equity shares with a face value of Rs 2 each", to eligible shareholders of SIL.

In Penna Cement, it will pay equity shareholders, whose names are recorded in the register of members on the record date, "Rs 321.50 for every one fully paid-up equity share of Rs 10 each" held in the transferor Company".

Ambuja Cements, a subsidiary of Adani Cement, completed its acquisition of Penna Cement Industries on August 16, 2024.

Commenting on the development Adani Group CEO – Cement Business Ajay Kapur said: "This merger aims to make our company more competitive and efficient, ultimately enhancing shareholder value".

Enhanced working capital management and internal funds will support the growth of our business operations. Moreover, unified cash flow management will pool resources for faster expansion and cost savings in administration and governance, thereby simplifying compliance requirements.

"This advancement through a larger entity will increase market competitiveness and deliver greater value to our shareholders," he said.

Adani Group entered into the Cement sector in September 2022, after acquiring controlling stakes in Ambuja Cement from Swiss firm Holcim for cash proceeds of USD 6.4 billion (about Rs 51,000 crore). Ambuja Cements owns a 51 per cent stake in ACC Ltd.

Later, it also launched a Rs 31,000 crore open offer for the acquisition of 26 per cent additional stakes from public shareholders.

After that, it is expanding its capacity. In October, billionaire Gautam Adani-led Adani Group announced to acquisition of CK Birla group firm Orient Cement at a valuation of Rs 8,100 crore as part of its expansion drive.

With the acquisition, Adani Cement will achieve a capacity of 100 MT (million Tones) per annum by the end of FY25 and a gain of 2 per cent in the overall market share in the country.

Adani group is aiming for a 140 million tonnes per annum capacity by FY28. It is competing with Aditya Birla group firm UltraTech Cement Ltd, which leads the segment with a consolidated capacity of 156.66 million tonnes per annum (MTPA) of grey cement.

Both the cement makers are rapidly scaling up their capacity. Adani Group aspires to have 140 MTPA capacity by FY28, while UltraTech expects to have 200 MTPA by FY27.