Adani Group to invest $3B in cement entities acquisitions
Cement

Adani Group to invest $3B in cement entities acquisitions

According to persons acquainted with the situation, the Adani Group is considering the acquisition of a number of cement firms, including Vadraj Cement, which is owned by ABG Shipyard, Hyderabad-based Penna Cement, Gujarat-based Saurashtra Cement, and the cement division of Jaiprakash Associates. According to these insiders, it is setting up $3 billion as a war fund for these purchases. In order to increase capacity and surpass UltraTech of the Aditya Birla Group as the largest cement maker in the next three to four years, the group is actively pursuing an inorganic approach. The largest cement companies in India are placing their bets on a spike in demand as the Centre moves on with its plan for infrastructure development, propelled by record capital spending. The sources estimated Penna Cement's worth at about Rs 90 billion. Depending on how well the capacity development from 10 MTPA (million tonnes per annum) to 15.5 MTPA proceeds, the worth may increase. The market capitalization of Saurashtra Cement is Rs 14 billion. A final deal was signed by Dalmia Bharat and Jaiprakash Associates in April 2022 for the latter's cement, clinker, and power facilities to be acquired for Rs 56 billion. Shareholder disagreements caused the deal to become stalled. According to information obtained by ET, the group is willing to pay a premium if the target firm has the ability to expand its capacity, owns limestone mines, and has a packing terminal. They are also looking to provide $85?120 enterprise value (EV) per tonne for these mid-sized cement enterprises. The Adani Group paid $100 EV per tonne to acquire Sanghi Cement, which has a 6.1 MTPA capacity, as was revealed late this year. Additionally, Penna Cement has a 2.8 MTPA packing terminal capability. The capacity of Saurashtra Cement is around 5 MTPA, JP Associates' capacity is 9.5 MTPA, and Vadraj Cement's capacity is 6 MTPA. Vadraj Cement and Jaiprakash Associates are both going through bankruptcy procedures. ICICI Bank was the catalyst for the insolvency of Jaiprakash Associates. The National corporation Law Appellate Tribunal (NCLAT) has informed ICICI Bank that it may take into consideration a one-time settlement plan offered by the corporation, but it has declined to halt the proceedings. Given that Ambuja Cement had cash and cash equivalents of Rs 243 billion on its books at the end of April and had warrant money of ~83 billion from the promoter, it would be the group's preferred method for acquisitions. There is no debt owed by the business. If synergies are better, Adani may select ACC, especially in southern India where the group's market share is lower.

According to persons acquainted with the situation, the Adani Group is considering the acquisition of a number of cement firms, including Vadraj Cement, which is owned by ABG Shipyard, Hyderabad-based Penna Cement, Gujarat-based Saurashtra Cement, and the cement division of Jaiprakash Associates. According to these insiders, it is setting up $3 billion as a war fund for these purchases. In order to increase capacity and surpass UltraTech of the Aditya Birla Group as the largest cement maker in the next three to four years, the group is actively pursuing an inorganic approach. The largest cement companies in India are placing their bets on a spike in demand as the Centre moves on with its plan for infrastructure development, propelled by record capital spending. The sources estimated Penna Cement's worth at about Rs 90 billion. Depending on how well the capacity development from 10 MTPA (million tonnes per annum) to 15.5 MTPA proceeds, the worth may increase. The market capitalization of Saurashtra Cement is Rs 14 billion. A final deal was signed by Dalmia Bharat and Jaiprakash Associates in April 2022 for the latter's cement, clinker, and power facilities to be acquired for Rs 56 billion. Shareholder disagreements caused the deal to become stalled. According to information obtained by ET, the group is willing to pay a premium if the target firm has the ability to expand its capacity, owns limestone mines, and has a packing terminal. They are also looking to provide $85?120 enterprise value (EV) per tonne for these mid-sized cement enterprises. The Adani Group paid $100 EV per tonne to acquire Sanghi Cement, which has a 6.1 MTPA capacity, as was revealed late this year. Additionally, Penna Cement has a 2.8 MTPA packing terminal capability. The capacity of Saurashtra Cement is around 5 MTPA, JP Associates' capacity is 9.5 MTPA, and Vadraj Cement's capacity is 6 MTPA. Vadraj Cement and Jaiprakash Associates are both going through bankruptcy procedures. ICICI Bank was the catalyst for the insolvency of Jaiprakash Associates. The National corporation Law Appellate Tribunal (NCLAT) has informed ICICI Bank that it may take into consideration a one-time settlement plan offered by the corporation, but it has declined to halt the proceedings. Given that Ambuja Cement had cash and cash equivalents of Rs 243 billion on its books at the end of April and had warrant money of ~83 billion from the promoter, it would be the group's preferred method for acquisitions. There is no debt owed by the business. If synergies are better, Adani may select ACC, especially in southern India where the group's market share is lower.

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