With Adani's purchase of Sanghi Industries, the industry consolidates further. Both Adani and Ultratech have significant cash hordes that could be deployed for further acquisitions
Ambuja Cement, part of the Adani Group, has added an additional 6 million tonnes in capacity with the acquisition of Sanghi Industries units in Kutch, marking another chapter in the ongoing consolidation of the Indian cement industry.
The deal also brings Adani’s cement business another step closer to Ultratech, the country’s largest cement maker, as both vie for the biggest company crown by the end of the decade. And finally, it marks the return of Adani to the dealmaking table post the Hindenburg report controversy that saw the group’s valuation plunge by over $100 billon.
Ambuja Cement has set itself an ambitious target of reaching 140 million tonnes in capacity by 2028, up from the current 73.6 million tonnes. According to the company, this target would now be achieved ahead of time. “With this deal, Adani will consolidate its position in the western region where Ultratech is a leader,” says Uttamkumar Srimal, senior research analyst-cement and infra, Axis Securities.
At an enterprise valuation of Rs5,000 crore, Ambuja gets 56.7 percent stake in Sanghi Industries. The company will also make a mandatory open offer to shareholders at Rs114.22 per share. Sanghi Industries has some obvious synergies for Adani Cement. Its plants are based in Gujarat and its cement can be shipped by sea, opening up markets in Saurashtra, Mumbai, Karnataka and Kerala. In a statement, Karan Adani, director, Ambuja Cements, said, “Synergy with Adani Ports will help us accelerate the implementation of this strategy.”
Adani, which acquired ACC and Ambuja from Holcim in September 2022, is the country’s second-largest cement maker with a capacity of 80 million tonnes at present. It has ongoing projects in Dahej and Ametha totalling 5 million tonnes as well as ongoing capex for 14 million tonnes. Once these are commissioned by FY25, the group’s cement capacity would be 101 million tonnes. By then, Ultratech, which is the country’s largest cement maker, has said it should get to 160 million tonnes.