Ambuja Cements Ltd (ACL) on Thursday announced the acquisition of majority stake in Sanghi Industries Ltd (SIL) at an enterprise value of Rs 5,000 crore. The acquisition includes a cement plant and captive jetties in Gujarat which will allow Ambuja to directly transport its products through the coastal route to states like Maharashtra, Karnataka and Kerala.
According to an official statement from the company, “ACL will acquire 56.74 per cent shares of SIL from its existing promoter group, Ravi Sanghi and family. The acquisition will be fully funded through internal accruals.”
The acquisition is expected to bring all the assets in Kutch district, most of which were built by the Sanghi Group after the Kutch earthquake of 2001. This includes the Sanghi Cement plant that was commissioned in 2002 as the world’s largest single stream cement plant located at Sanghipuram in Abdasa taluka of Kutch.
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With 2,700 hectares of land, the integrated unit at Sanghipuram 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 also 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.
The company also stated that jetty 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. SIL also has a bulk cement terminal each at Navlakhi Port in Gujarat and Dharamtar Port in Maharashtra.
The acquisition is also expected to help Ambuja tap the fly-ash produced at Adani Group’s thermal power plants in Mundra for the acquired cement facility.
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With SIL’s limestone reserves of a billion tonnes, ACL has targeted to 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. Our aim is to make SIL lowest cost producer of Clinker in the country,” Gautam Adani, Chairman of the Adani Group stated.
“With this acquisition, the Adani Group is well on course to achieve its target of 140 MTPA of cement manufacturing capacity by 2028 ahead of time,” he added.
Karan Adani, the non-executive non-independent director of the company also had a similar view. “Our vision is to produce lowest cost clinker in the country at Sanghipuram and then transport clinker as well as bulk cement through coastal route to the market of Saurashtra, South Gujarat, Mumbai and Mumbai Metropolitan region, Karnataka and Kerela. Synergy with the assets of Adani ports will help us accelerate in implementation of this strategy. With the right implementation we are very confident that we would be the lowest cost supplier of cement in all these markets,” Karan stated.
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The acquisition of SIL will help ACL to 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, the Adani Group’s capacity will be 101 MTPA by 2025.