Ambuja Cement has signed an agreement to acquire Penna Cement Industries (PCIL) for Rs 10,422 crore as it targets a production capacity of 140 million tonne per annum (MTPA) by 2028, the Adani Group said on Thursday.
The latest acquisition will add another 14 MTPA production capacity to Adani Cement – the holding company of ACC and Ambuja Cement – taking its total capacity to 89 MTPA. The deal will also help Ambuja expand its market presence in south India.
Ambuja will acquire the entire stake of PCIL from its promoter group, P Pratap Reddy and family. The acquisition will be fully funded through internal accruals.
“PCIL’s strategic location and sufficient limestone reserves provide an opportunity to increase cement capacity through debottlenecking and additional investment. Importantly, the bulk cement terminals will prove to be a game changer by giving access to the eastern and southern parts of peninsular India, apart from an entry to Sri Lanka, through the sea route,” Ambuja Cement CEO Ajay Kapur said.
“Our aim is to make PCIL highly-competitive on cost and productivity and improve its operating performance,” he added.
Of PCIL’s total 14 MTPA capacity, 10 MTPA is operational and the remaining is under construction — 2 MTPA at Krishnapatnam and 2 MTPA at Jodhpur – expected to be completed in the next 6-12 months. Further, its surplus clinker at the Jodhpur plant will support an additional 3 MTPA cement grinding capacity.
Following the deal, the existing dealers of PCIL will move to Adani Cement.
However, the deal will not upset the pecking order yet, with Aditya Birla group company UltraTech Cement still topping the charts with a production capacity of 152.7 MTPA. While Adani Cement (ACC & Ambuja Cement) comes in second, 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, according to companies’ data.
The current total installed production capacity in the country stands at 541 MTPA.
Adani Cement has been scouting for acquisitions even as the firm was looking at organic growth to achieve the target of 140 MTPA by 2028. In 2023, Ambuja Cement acquired Sanghi Industries, which had a production capacity of 6.1 MTPA, and later in January this year, its subsidiary ACC closed the acquisition of the balance 55% stake in Asian Concretes and Cements (2.8 MTPA).
Adani Group had forayed into the cement sector with the acquisition of Switzerland-based Holcim Group’s stake in Ambuja Cement and ACC for $6.6 billion in September 2022.
The firm had also announced plans to start 4 MTPA clinkering and 4.8 MTPA cement capacity in the fourth quarter of FY25.
According to an Icra report released on Thursday, the market share of top five cement companies is expected to increase to 55% by March 2025, backed by a healthy demand.
The market share of the top five companies — UltraTech Cement, Adani Group, Shree Cement, Dalmia Cement (Bharat) and Nuvoco Vistas — witnessed a steep rise to 54% as of December 2023 from 45% as of March 2015. These firms are also looking to increase their capacity and maintain market share through organic and inorganic expansions.
According to industry experts, a further consolidation is in the offing as top firms embark on a capacity addition spree, mostly eyeing the 16 MTPA of stressed assets available in the country. Expansion through greenfield initiatives is also in the offing as cement companies mull addition of another 150-160 MTPA of production capacity over the next five years.
India, the second-largest producer and consumer of cement after China, had seen a wave of acquisitions sweeping through the sector, including that of Adani Group’s buy of Holcim Group’s stake in Ambuja Cements and ACC.
