Sanghi Industries, Penna Cement to merge with parent Ambuja: Adani Group

Ambuja Cements, part of the Adani Group, on Tuesday announced the merger of its subsidiaries Sanghi Industries Ltd (SIL) and Penna Cement Industries Ltd (PCIL) with the parent company.

Under the proposed scheme, Ambuja Cements will issue 12 equity shares of face value Rs 2 each for every 100 equity shares of SIL with a face value of Rs 10 each to eligible shareholders. The transaction, subject to requisite approvals, is expected to be completed within 9-12 months.

"This merger aims to make our company more competitive and efficient, ultimately enhancing shareholder value. Enhanced working capital management and internal funds will support the growth of our business operations," said Ajay Kapur, CEO, Cement Business, Adani Group.

Unified cash flow management will pool resources for faster expansion and cost savings in administration and governance, thereby simplifying compliance requirements. This advancement through a larger entity will increase market competitiveness and deliver greater value to our shareholders.” he added.

SIL has a clinker capacity of 6.6 million tonnes per annum (MTPA), cement capacity of 6.1 MTPA, and limestone reserves of around one billion tonnes. Its Sanghipuram plant in Gujarat is India's largest single-location cement and clinker unit, equipped with a captive jetty and power plant.

Penna Cement, on the other hand, operates four integrated plants in Andhra Pradesh and Telangana and a grinding unit in Maharashtra with a total capacity of 10 MTPA. The company is also constructing two plants of 2 MTPA each in Krishnapatnam (Andhra Pradesh) and Jodhpur (Rajasthan), expected to be operational within the next 8-12 months.

The consolidation is expected to simplify the organisation's structure, improve working capital management, and enhance market competitiveness, the company said.

Ambuja Cements is one of India's leading cement companies with a market capitalisation of around 1.26 lakh crore. Ambuja Cements, along with its subsidiaries, has taken the Adani Group’s cement capacity to 89 MTPA with 22 integrated cement manufacturing plants and 21 cement grinding units across the country.