Ambuja Cements to take over Sanghi Industries next week, sources say
Informist, Friday, Dec 1, 2023
By Sunil Raghu
AHMEDABAD – The Adani Group is set to take over all the manufacturing and marketing operations of Sanghi Industries Ltd next week, three officials aware of the development said.
On Aug 3, the Adani Group had announced that Ambuja Cements Ltd would acquire 56.74% stake in Sanghi Industries at an enterprise value of 50 bln rupees. Ambuja Cements was to acquire the stake from promoters Ravi Sanghi and family at 114.22 rupees per share.
Through Ambuja Cements, the Adani Group has also acquired an additional 26% stake in Sanghi Industries through an open offer at 114.22 rupees a share. For this, it shelled out 7.67 bln rupees. Post the completion of the deal, the Adani Group would hold 82.74% stake in Sanghi Industries.
"They (Adani group) are about to transfer the second tranche of payment, about 15 bln rupees, in an escrow account in a day or two," a senior official involved with the transaction told Informist.
In the first tranche, Adani Group had lent 3 bln rupees as an unsecured inter-corporate deposit to Sanghi Industries to keep the cement plant of the company operational, the company official said.
"The final tranche of 17 bln rupees of payment would be between the promoters, which can take place later after the takeover of operations by the Adani Group is complete," the official added.
Sanghi Industries has clinker capacity of 6.6 mln tn per annum, cement capacity of 6.1 mln tn per annum, and limestone reserves of 1 bln tn. Its unit at Sanghipuram in Kutch, Gujarat, is the country's largest single-location cement and clinker unit by capacity. The unit also has a captive jetty and a 130-MW captive power plant. It has a network of 850 dealers, with presence in Gujarat, Madhya Pradesh, Rajasthan, Maharashtra, and Kerala.
While the Adani Group has carried out the takeover through Ambuja Cements Ltd, it plans to sell cement from the Sanghipuram plant under the ACC brand, another cement company that the group had acquired.
ACC does not have a substantial presence in the 25-28-mln-tn-per-annum Gujarat cement market. Ambuja Cements has 8-10% market share, with a better presence in the eastern part of Gujarat.
Sanghi Cement, on the other hand, has a sizeable presence in the western part of the state — Saurashtra and Kutch regions — owing to the proximity of its manufacturing plant.
"The back-end technical teams and systems for the takeover are in place and even cement bags with branding of ACC have been kept ready at the Sanghipuram cement plant," the Sanghi Industries official said.
The Adani Group has already announced it plans to increase cement capacity at Sanghipuram, Kutch, to 15 mln tn per annum over the next two years. It also plans to expand the captive port to handle vessel sizes of 20,000 deadweight tonnage, from 4,000 deadweight tonnage currently, by way of dredging, according to company officials.
The Adani Group has also announced that bulk terminals and grind units would be created along the western coast to enable the movement of clinker and cement through the sea route at the lowest possible cost.
Today, shares of Sanghi Industries ended locked in the 5% upper circuit at 127.30 rupees, and those of Ambuja Cements closed 0.6% higher at 442 rupees. Shares of ACC Ltd closed 1.3% higher at 1900.25 rupees on the National Stock Exchange. End