Another cement company has come into the kitty of Adani Group company Ambuja Cements. This company on Thursday announced the acquisition of Penna Cement Industries Limited (PCIL) for a consideration of Rs 10,422 crore. Both the companies have signed a firm agreement for this acquisition. Under this agreement, Ambuja Cements will buy 100 percent shares of PCIL from the existing promoter group P Pratap Reddy family.
Adani’s dominance will increase
The acquisition of Hyderabad-based Penna Cement will increase Adani Group’s cement production capacity by 14 million tonnes per annum. With this, the total cement production capacity of Adani Group will reach 89 million tonnes per year. Penna Cement has a production capacity of 14 million tonnes per annum in Andhra Pradesh, Telangana and Rajasthan (under construction). With this, additional cement grinding capacity of 30 lakh tonnes per annum will be created due to surplus clinker in its Jodhpur plant.
Logistics also strengthened
This acquisition will also strengthen the maritime transportation logistics of Adani Group. Under this, five bulk cement terminals will be opened in Kolkata, Gopalpur, Karaikal, Kochi and Colombo to serve peninsular India. This acquisition will increase Adani Group’s all India share in the cement market by 2 percent and in South India by 8 percent.
expansion of cement business
According to rating agency ICRA, the top five domestic cement manufacturers can increase their market share to 55 percent by March 2025 through acquisitions and their own expansion plans. The report expects that these companies will continue to grow on their own in the medium term and will also use acquisitions to expand their capacity.
According to the report, apart from the acquisition of ACC and Ambuja Cements by Adani Group, other M&A deals in the sector were executed mainly due to cash flow constraints of the acquired entity or due to financial pressure of the group.
