Adani Group Cement Arm To Acquire Controlling Stake In Sanghi Industries

Ambuja Cements Ltd., a part of Adani Group, agreed to acquire a 56.74% stake in Sanghi Industries Ltd. at an enterprise value of 5,000 crore rupees ($605 million) in cash to boost its footprint in the cement market.

Ambuja, the cement and building material company of Adani Cement, will acquire as much as 14.66 crore Sanghi shares from its existing promoter group Ravi Sanghi & family for a consideration of up to 114.22 rupees per share, the cement maker said in stock exchange announcement.

The company executed the share purchase agreement with Ravi Sanghi, Anita Sanghi, Ekta Sanghi, Aditya Sanghi, Alok Sanghi, Sanghi Polymers Private Ltd., Samruddhi Investors Services Private Ltd., Flarezeal Solutions LLP, and Thinkfar Tradelink Private Ltd.

The acquisition, which will be fully funded through internal accruals, would expand Ambuja’s market presence, strengthen its product portfolio, and reinforce its position as a leader in the construction materials sector, Adani Group Chairman Gautam Adani said.

Sanghi has clinker capacity of 6.6 million tons per annum (MTPA), cement capacity of 6.1 MTPA and limestone reserves of 1 billion tons, according to the statement. The company’s integrated manufacturing unit at Sanghipuram in Gujarat’s Kutch district is India’s largest single-location cement and clinker unit by capacity, with a captive jetty and captive power plant, it said.

Sanghi has a network of 850 dealers, with market presence in Gujarat, Madhya Pradesh, Rajasthan, Maharashtra and Kerala. The company also has a bulk cement terminal each at Navlakhi Port in Gujarat and Dharamtar Port in Maharashtra.

Ambuja said the acquisition will boost its cement capacity to 73.6 MTPA from the current 67.5 MTPA. The company will also look to increase Sanghi’s cement capacity at Sanghipuram to 15 MTPA in the next two years, as well as invest in expanding the captive port at Sanghipuram to handle larger vessels.

The acquisition, which is likely to be completed within three to four months, is subject to approval of the Competition Commission of India.

Ambuja said its board also approved making an open offer for up to 6.72 crore Sanghi shares, or 26% stake, at 114.22 apiece from the public shareholders.

(Note: $1 = 82.5996 Indian rupees)

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