Adani merges Sanghi, Penna with Ambuja Cements

The Adani group this week approved the merger of Sanghi Industries Ltd and Penna Cement Industries Ltd with Ambuja Cements Ltd

The boards of the companies finalized the schemes of arrangement during a meeting, Ambuja Cements said in a statement to the exchanges on Tuesday.

“The merger aims to make our company more competitive and efficient, ultimately enhancing shareholder value,” Ajay Kapur, chief executive of cement business at Adani Group, said.

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

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

Sanghi Industries Ltd has a clinker capacity of 6.6 million tons per annum (mtpa), cement capacity of 6.1 mtpa, and limestone reserves of ~1 billion tons.

Its Sanghipuram plant is India’s largest single-location cement and clinker unit by capacity, with a captive jetty and captive power plant.

Penna Cement Industries has four integrated plants in Andhra Pradesh and Telangana, along with a grinding unit in Maharashtra.

It has an operational capacity of 10 mtpa.

Additionally, two plants, with a capacity of 2 mtpa each, are under construction in Krishnapatnam and Jodhpur, expected to be completed within next 8-12 months.

It also has five bulk cement terminals at Kolkata, Gopalpur, Karaikal, Kochi, and Colombo (Sri Lanka).

Ambuja Cements will issue 12 equity shares of the face value of Rs2 each for every 100 equity shares of Sanghi Industries of face value Rs10 each as recommended by the valuers and accepted by the board and thereby, the eligible shareholders of SIL will become the shareholders of Ambuja Cements, the statement said.

Penna shareholders will receive Rs321.50 per fully paid-up equity share of Rs10.

The transactions, subject to regulatory approvals, are expected to complete in 9-12 months.