Ambuja Cement Acquires Majority Stake Of Sanghi Industries At An Enterprise Value Of Rs 5,000 Crore

Ambuja Cement, part of Adani Group, will buy 56.74 per cent stake in Sanghi Industries Ltd (SIL) from its existing promoter group, Ravi Sanghi and family

The deal would help Ambuja Cement to expand its capacity to 73.6 MTPA in the segment, in which it had entered last September, after the acquisition of majority stakes in Ambuja Cement and its subsidiary ACC Ltd.

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Ambuja Cement, the cement and building material company of the diversified Adani Group, on Thursday announced the acquisition of a majority stake in Sanghi Industries, one of the leading cement manufacturers from western India, at an enterprise value of Rs 5,000 crore. Ambuja Cement, part of Adani Group, will buy 56.74 per cent stake in Sanghi Industries Ltd (SIL) from its existing promoter group, Ravi Sanghi and family. The acquisition will be fully funded through internal accruals, said a statement from Ambuja Cement.

Gautam Adani, chairman of the group, said, "This landmark acquisition is a significant step forward in Ambuja Cements’ accelerating growth journey." This is the first major deal by ports-to-power conglomerate after the Hidenburg report alleged financial misconduct at the company.

The deal would help Ambuja Cement, the second biggest manufacturer after UltraTech, to expand its capacity to 73.6 MTPA (million tonne per annum) in the segment, in which it had entered last September, after the acquisition of majority stakes in Ambuja Cement and its subsidiary ACC Ltd.

Ambuja Cement said, "The acquisition of Sanghi Industries will help Ambuja Cements strengthen its market leadership and increase its cement capacity to 73.6 MTPA from the current 67.5 MTPA. With the ongoing capex of 14 MTPA and with commissioning of 5.5 MTPA capacity at Dahej and Ametha by Q2 of FY24, Adani Group’s capacity will be 101 MTPA by 2025."

Adani said, "By joining hands with Sanghi Industries, Ambuja is poised to expand its market presence, strengthen its product portfolio, and reinforce its position as a leader in the construction materials sector. With this acquisition, Adani Group is well on course to achieve its target of 140 MTPA of cement manufacturing capacity by 2028 ahead of time."

With Sanghi Industries' limestone reserves of a billion tonne, Ambuja Cement will increase cement capacity at Sanghipuram to 15 MTPA in the next two years, he added.

Ambuja Cements will also invest in expanding the captive port at Sanghipuram to handle larger vessels. Sanghi Cement has cement plants at Kutch in Gujarat, which has a 6.6-MTPA capacity clinker plant and a 6.1-MTPA capacity cement plant. Its Sanghipuram unit is India’s largest single-location cement and clinker unit by capacity, with a captive jetty and captive power plant.

With this acquisition, Ambuja Cement's capacity will increase to 73.6 MTPA. Ambuja’s goal of 140 MTPA capacity by 2028 will be achieved ahead of time, it said.

"Our aim is to make SIL the lowest cost producer of clinker in the country. Ambuja will increase the cement capacity at Sanghipuram to 15 MTPA in the next two years," the company said.

Given Adani Group’s strength in building and operating marine infrastructure, the port at Sanghipuram will be expanded to handle vessel sizes of 8,000 DWT (deadweight tonnage). "Bulk terminals and grinding units will be created along the western coast to enable movement of clinker and cement through the sea route at the lowest possible cost," it said.

SIL also has a bulk cement terminal each at Navlakhi Port in Gujarat and Dharamtar Port in Maharashtra. Most of the cement is transported through the sea route, which is environment-friendly and cost competitive. SIL has a network of 850 dealers, with market presence in Gujarat, Madhya Pradesh, Rajasthan, Maharashtra and Kerala.

Ambuja Cement on Wednesday logged an increase of 31.2 per cent in consolidated net profit at Rs 1,135.46 crore and clocked a revenue from operations of Rs 8,712.90 crore for the June quarter. Consolidated results of Ambuja Cement include the financial performance of its step-down firm ACC Ltd, in which it owns around 51 per cent stake.