Adani Group buys Penna Cement from Reddys for $1.25 billion

Adani Group has acquired Penna Cement Industries Ltd (PCIL) at an enterprise value of ₹10,422 crore (about $1.25 billion) from promoters P. Pratap Reddy and family.

Ambuja Cement, the cement and building material company of Adani Group, signed a binding agreement to acquire 100% shares of PCIL. The acquisition will be fully funded through internal accruals, the conglomerate said. 

The acquisition will add 14 mtpa (million tonnes per annum) capacity to Adani Group’s existing capacity, taking the total to 89 mtpa. 

“This landmark acquisition is a significant step forward in Ambuja Cement’s accelerating growth journey,” said Ajay Kapur, chief executive officer and whole time director of Ambuja Cement. 

“By acquiring PCIL, Ambuja is poised to expand its market presence in south India and reinforce its position as a pan-India leader in the cement industry. PCIL’s strategic location and sufficient limestone reserves provide an opportunity to increase cement capacity through debottlenecking and additional investment,” Kapur said. 

“Importantly, the bulk cement terminals (BCTs) will prove to be a gamechanger by giving access to the eastern and southern parts of peninsular India, apart from an entry to Sri Lanka, through the sea route. Our aim is to make PCIL highly competitive on cost and productivity and improve its operating performance,” he added. 

PCIL has 14 MTPA cement capacity, of which 10 MTPA is operational, and the remaining is under construction at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA) and will be completed within 6 to 12 months. Around 90% of the cement capacity comes with railway sidings, and some are supported by captive power plants and waste heat  recovery systems. 

Further, surplus clinker at the Jodhpur plant will support an additional 3 MTPA cement grinding capacity over and above 14 MTPA. 

The existing dealers of PCIL will move to Adani Cement’s market network to bring in formidable synergy, the company said. 

Ambuja, with its subsidiaries ACC Ltd. and Sanghi Industries Ltd, has 18 integrated cement manufacturing plants and 19 cement grinding units across the country.

The Adani Group acquired Ambuja Cements and its subsidiary ACC Ltd from Switzerland’s Holcim Group for $6.4 billion in September 2022. Later, it acquired an additional 26% stake from public shareholders through a ₹31,000 crore ($3.72 billion) open offer.

The Adani family has infused ₹20,000 crore, or $2.39 billion, into the cement company under the warrants program since taking over.