The Gautam Adani family owned Ambuja Cements is buying Penna Cement Industries in a deal valued at £1.04 bn including debt, expanding its presence in the south. The transaction marks Ambuja’s fourth M&A after Adani checked into the sector through the former in Sept 2022.
Hyderabad-based Penna, promoted by P Prathap Reddy and family, has an annual production capacity of 14 million tons (of which 4 million tons is under construction). It also has limestone reserves and captive power plants.
The Penna acquisition, to be financed by internal accruals, will improve Ambuja’s share by 8% in south India and comes months after market leader UltraTech Cement ramped up its play in the region by buying Kesoram Industries’ building materials units. As of April end, Ambuja had cash of £2.43 bn on its books, having received warrant money of £833.9 mn from the Adani family.
The Penna transaction will help Ambuja and its arms, including ACC and Sanghi Industries, beef up capacity to 89 million tons, moving towards its larger goal of 140 million tons by 2028. UltraTech, owned by Kumar Mangalam Birla, has a capacity of over 150 million tons.
Ambuja previously acquired Gujarat-based Sanghi, My Home’s cement unit in Tamil Nadu and Asian Concretes and Cements’ plants in Himachal Pradesh and Punjab.
Penna’s seven plants in Andhra Pradesh, Telangana and Rajasthan (under construction) and limestone reserves “provide an opportunity to increase cement capacity through debottlenecking and additional investment”, said Ambuja Cements CEO Ajay Kapur.
