Ambuja Cements, a cement firm acquired by the Adani Group, is understood to have closed a deal to acquire Sanghi Cement at an enterprise valuation of about Rs 6,000 crore.
This would be the first acquisition by the Gautam Adani-helmed firm after the US-based Hindenberg Research claimed there are significant governance issues within the Adani Group.
Sanghi Cement, which mainly caters to the western markets of Gujarat, Rajasthan, Maharashtra and Madhya Pradesh, has a production capacity of 6.1 MTPA. It also owns a captive power plant with a capacity of 143 MW.
While the exact contours of the deal could not be immediately ascertained, industry sources said that Adani Group will invest Rs 4,500 crore to acquire the promoters’ stake and take over the company’s debt of about Rs 1,500 crore. An announcement on the same was expected soon, if not on Wednesday.
Adani Group, in its largest acquisition ever and India’s largest M&A transaction in the infrastructure and materials space, had acquired Switzerland-based Holcim Group’s stake in Ambuja Cements and ACC for $6.5 billion in cash in September last year. Holcim, through its subsidiaries, held 63.19% stake in Ambuja Cements and 54.53% in ACC (of which 50.05% is held through Ambuja Cements).
Following the acquisition of ACC and Ambuja Cements, Adani Group wanted to nearly double its capacity to 140 MTPA (including adding 40 MTPA of clinker and 70 MTPA of grinding capacity and increasing share of waste heat recovery systems to 30%) by FY28. The firm also intended to become the largest cement manufacturer in the country.
However, the acquisition will not change the pecking order in the industry, with Adani Group cement companies continuing to be in the second position with a total of 73.6 MTPA capacity.
UltraTech Cement with a total capacity of 133 MTPA tops the chart, followed by Adani Cement (ACC & Ambuja Cement) at 67.5 MTPA. Shree Cement with 49.9 MTPA, Dalmia Cement (Bharat) with 43.7 MTPA, Nuvoco Vistas with (25 MTPA), JSW (19 MTPA) and India Cements (16 MTPA) are others in the list.
Sanghi Cement is the brand name of Sanghi Industries’ cement products. Sanghi Industries, listed on both BSE and NSE, had posted a net loss of Rs 325.70 crore for FY23 on revenues of Rs 928.36 crore. The company’s promoters hold 72.72% stake, and had pledged almost 99% of its shares.
According to earlier media reports, companies such as Shree Cement, UltraTech, Dalmia Bharat, JK Organisation, Nirma Group and JSW Cement were interested in bidding for the stake.
Later, Shree Cement withdrew as the Kolkata-headquartered firm intends to focus on its own expansion plans, Shree Cement vice chairman Prashant Bangur had told FE.
On Wednesday, shares in Sanghi Industries – which hit a five-year-high during intra-day trade – closed up 4.99% at Rs 100.73, and that of Ambuja Cements’ ended down 0.14% at Rs 460.95 on the BSE.