Adani Group completes stake purchase in Sanghi Industries Ltd

In August this year, Ambuja Cements Ltd (ACL) proposed Rs 114.22 per share to acquire a 26% stake in Sanghi Industries, with each share having a face value of Rs 10, from its public shareholders.

"In terms of the company's obligations under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 ('Takeover Regulations'), the offer price as defined in the PA shall stand revised to Rs 121.90," Ambuja Cements said in a regulatory filing.

ACL in a separate statement informed that it "successfully completes acquisition of Sanghi Industries, funded entirely through internal accruals" at an enterprise value of Rs 5,185 crore.

"With the acquisition funded entirely through internal accruals, ACL holds a controlling stake of 54.51 per cent in SIL," it said.

With this, the production capacity of ACL, which also owns ACC Ltd, has increased from 68. 5 to 74.6 MTPA (Million Tonnes Per Annum).

"ACL will increase its coastal footprint with this acquisition & by increasing capacity to 15 MTPA across the West Coast markets with states of Gujarat, Maharashtra, Karnataka, Kerala at a very competitive cost based on SIL's strength of low-cost clinker. This additional capacity to be commissioned over next 30 months," it said.

In accordance with the share purchase agreement, Ambuja Cements Ltd (ACL) acquired 14.08 crore shares of Sanghi Industries from the promoters at a rate of Rs 121.90 per equity share. The remaining 57.56 lakh shares from the promoter group, constituting 2.23 percent, will also be obtained separately at the same price, said ACL.

Sanghi Industries Limited (SIL) possesses a comprehensive integrated manufacturing facility spanning 2,700 hectares located in Sanghipuram along the coastal region of Gujarat. This facility is India's largest single-location producer of cement and clinker.

ET reported that the facility includes two kilns with a significant clinker production capacity of 6.6 MTPA, a cement grinding unit of 6.1 MTPA, a dedicated 13 MW captive power plant, and an efficient 13 MW Waste Heat Recovery System.

It has a captive jetty in Sanghipuram, with plans from the Adani group to invest in expanding the port's capacity. Adani Ports and Special Economic Zones (APSEZ) CEO Karan Adani announced the expansion on August 3 as part of a deal. The expansion aims to handle vessel sizes of up to 8,000 DWT (deadweight tonnage).

The acquisition of Sanghi Industries Limited (SIL) provides Ambuja Cements Ltd (ACL) with a billion-tonne reserve of high-quality surface mining limestone.

This acquisition aligns with ACL's coastal strategy to enhance cement capacity to 15 MTPA along the West Coast, leveraging SIL's cost-efficient clinker.

The initiative aims to capitalize on the strengths of the Ambuja and ACC brands. ACL plans to invest in expanding the existing captive port at Sanghipuram to accommodate larger vessels, catering to the growing demand for cement in Gujarat, Maharashtra, Karnataka, and Kerala at a competitive cost.

The commissioning is expected to be completed over the next 30 months.

Adani's Cement Business CEO, Ajay Kapur, sees this acquisition as a significant advancement, solidifying the Adani Group's leadership in India's cement industry.

"We welcome the employees of Sanghi Industries into the Adani family and look forward to capitalising on the synergies this acquisition offers. Recognizing the Adani Group's expertise in marine infrastructure, plans are underway to expand the Sanghipuram port's capacity to handle larger vessels, facilitating cost-effective transportation of clinker and cement via sea routes," he said.

Ambuja Cement is the second biggest cement company in India after UltraTech Cement owned by the Aditya Birla Group.