Ambuja Cements shares in focus as cement major merges subsidiaries, Sanghi and Penna Cement; check merger details 

Ambuja Cements announced separate schemes of arrangement for its subsidiaries Sanghi Industries Limited (SIL) and Penna Cement Industries Limited (PCIL).

"This consolidation will help to streamline the organisation structure and simplify compliance requirements for effective governance," said a statement from the country's second-largest cement maker.

The Adani Group firm, which also owns ACC Ltd., said the amalgamation is subject to requisite approvals and expects the transaction to be completed within 9-12 months.

Ambuja Cements holds 58.08% of the paid-up equity share capital of Sanghi Industries. It acquired the company in December 2023.

This will be based on swap rationale and "for every 100 equity shares of SIL with a face value of ₹10 each, Ambuja Cements will issue 12 equity shares with a face value of ₹2 each" to eligible shareholders of SIL.

In Penna Cement, it will pay equity shareholders, whose names are recorded in the register of members on the record date, "₹321.50 for every one fully paid-up equity share of ₹10 each" held in the transferor company".

Ambuja Cements, a subsidiary of Adani Cement, completed its acquisition of Penna Cement Industries on August 16, 2024.

Commenting on the development, Adani Group CEO, Cement Business, Ajay Kapur, said, "This merger aims to make our company more competitive and efficient, ultimately enhancing shareholder value.".

With the acquisition, Adani Cement will achieve a capacity of 100 MT (million tons) per annum by the end of FY25 and a gain of 2% in the overall market share in the country.

Adani Group is aiming for a 140 million tonnes per annum capacity by FY28. It is competing with Aditya Birla Group firm UltraTech Cement Ltd., which leads the segment with a consolidated capacity of 156.66 million tonnes per annum (MTPA) of grey cement.

Adani Group entered the cement sector in September 2022, after acquiring controlling stakes in Ambuja Cements from Swiss firm Holcim for cash proceeds of $6.4 billion (about ₹51,000 crore). Ambuja Cements owns a 51% stake in ACC Ltd.

The company added that enhanced working capital management and internal funds will support the growth of its business operations. 

Moreover, 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," Ajay Kapur said.