Ambuja Cements, backed by the Adani Group, has announced a transformative acquisition of Penna Cement Industries Ltd (PCIL) for ₹10,422 crore. This strategic move aims to significantly bolster Ambuja’s position in the cement industry and propel its production capacity to 140 million tonnes per annum (MTPA) by FY28.
Ambuja anticipates completing the acquisition within 3 to 4 months, using internal resources to fund the entire transaction. The acquisition involves purchasing PCIL’s stake from its promoter group, led by P Pratap Reddy, marking a pivotal shift in ownership dynamics.
This strategic move is expected to consolidate Ambuja Cements’ footprint in South India, solidifying its standing as a key player in the national cement market. By integrating PCIL, Ambuja aims to capture a substantial market share, targeting 20% by FY28, amidst rising demand for construction materials across India. The acquisition aligns with Adani Group’s growth strategy in the cement sector, highlighting synergistic benefits and expanding geographical reach.
In addition to acquiring PCIL, Ambuja recently finalized the acquisition of a grinding unit in Tamil Nadu for ₹413.75 crore, enhancing its operational presence in South India. The acquisition of PCIL will provide Ambuja access to strategically located assets, substantial limestone reserves, and efficient bulk cement terminals (BCTs), enabling penetration into eastern and southern Indian markets and exploring export opportunities to Sri Lanka via maritime routes.
PCIL currently operates with an installed cement production capacity of 10 MTPA, spread across four integrated plants and two grinding units in Andhra Pradesh, Telangana, and Maharashtra. Ongoing expansion projects at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA), scheduled for completion within the next 6 to 12 months, will further bolster Ambuja’s production capabilities.
Approximately 90% of PCIL’s cement capacity is supported by railway sidings, captive power plants, and advanced waste heat recovery systems, enhancing operational efficiencies and reducing logistical costs. The surplus clinker from the Jodhpur plant will support an additional 3 MTPA cement grinding capacity, elevating the total capacity to 14 MTPA. These infrastructural advantages are expected to deliver significant operational efficiencies and cost savings.
The integration of PCIL’s existing dealers into Ambuja Cements’ distribution network will facilitate seamless operations and strengthen market presence. This strategic alignment is set to enhance Ambuja’s competitive edge and distribution capabilities in the dynamic Indian cement industry.
In conclusion, Ambuja Cements’ acquisition of PCIL marks a pivotal step towards expanding its capacity and market reach. By leveraging synergies and integrating PCIL’s assets, Ambuja Cements is well-positioned to reinforce its leadership in the cement sector. This acquisition underscores Adani Group’s commitment to consolidating its presence in the industry and meeting the growing demand for construction materials across the region.