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Ambuja Cements, an Adani Group company, has made a ₹767 crore open offer to buyout 26 per cent stake from shareholders of Sanghi Industries following the acquisition of 56.74 per cent stake from the company’s promoters at an enterprise value of ₹5,000 crore.
The open offer made to acquire up to 6.71 crore equity shares at ₹114.22 a piece, will catapult Ambuja Cement and its subsidiary ACC achieve capacity of 100 million tonnes and inch closer to 132 mt capacity of the market leader Aditya Birla Group company UltraTech Cement.
Additional funding
Ambuja Cements, which plans to fund the deal through internal accruals, will also pump in ₹300 crore through inter-corporate deposit agreement for meeting general corporate purposes of Sanghi Industries.
Gautam Adani, Chairman, Adani Group, said the deal will help Ambuja Cements expand its market presence, strengthen its product portfolio and reinforce its position as a leader in the construction materials sector.
With this deal, the Adani Group is well on course to achieve its target of 140 mtpa of cement manufacturing capacity before the set deadline of 2028.
With SIL’s limestone reserves of a billion tonnes, ACL will increase cement capacity at Sanghipuram to 15 mtpa in the next two years. ACL will also invest in expanding the captive port at Sanghipuram to handle larger vessels with an aim to make SIL lowest cost producer of clinker in the country, he said.
SIL’s integrated manufacturing unit at Sanghipuram in Gujarat’s Kutch district is the largest single-location cement and clinker unit by capacity.
With 2,700 hectares, the integrated unit has two kilns with a clinker production capacity of 6.6 mtpa and a cement grinding unit with a capacity of 6.1 mtpa.
It has a captive power plant of 130 MW and a waste heat recovery system of 13 MW. The unit is also connected with a captive jetty at Sanghipuram.
Capacity expansion
The acquisition of SIL will enhance Ambuja Cements capacity to 73.6 mtpa from 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, the Adani Group’s capacity will be 101 mtpa by 2025.
Uttamkumar Srimal, Senior Research Analyst, Axis Securities, said with an enterprise value per tonne at $100, the deal is attractive and will allow Adani Group to gain market share in the western region, where UltraTech is the market leader.
Besides the possibility of expanding capacity at the acquired asset in the next two years, he added various synergy benefits will accrue in logistics, raw material sourcing and product marketing, resulting in better operating performance of the acquired unit, he added.
POINTERS:
Open offer to existing shareholders of Sanghi Industries at ₹114.22 a share
The deal will enhance Ambuja Cements capacity to 73.6 mtpa from 67.5 mtpa
Capacity at the newly acquired company can be increased to 15 mtpa
The acquired asset also has a jetty and limestone mines to support expansion
It will strengthen Adani Group company’s market share in the Western region
Ambuja Cements will also pump in ₹300 crore in Sanghi Industries
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