Adani buys Penna Cement from Reddys in Rs 10,000 crore deal – Times of India


MUMBAI: The Gautam Adani family owned Ambuja Cements is buying Penna Cement Industries in a deal valued at Rs 10,442 crore including debt, expanding its presence in the south. The transaction marks Ambuja’s fourth M&A after Adani checked into the sector through the former in Sept 2022.
Hyderabad-based Penna, promoted by P Prathap Reddy and family, has an annual production capacity of 14 million tons (of which 4 million tons is under construction).It also has limestone reserves and captive power plants.

The Penna acquisition, to be financed by internal accruals, will improve Ambuja’s share by 8% in south India and comes months after market leader UltraTech Cement ramped up its play in the region by buying Kesoram Industries’ building materials units. As of April end, Ambuja had cash of Rs 24,338 crore on its books, having received warrant money of Rs 8,339 crore from the Adani family.
The Penna transaction will help Ambuja and its arms, including ACC and Sanghi Industries, beef up capacity to 89 million tons, moving towards its larger goal of 140 million tons by 2028. UltraTech, owned by Kumar Mangalam Birla, has a capacity of over 150 million tons. In April, India’s third-largest player Shree Cement, led by Hari Mohan Bangur, inaugurated a 3-million-ton plant in Andhra Pradesh to bolster its capacity to 56 million tons.
Ambuja previously acquired Gujarat-based Sanghi, My Home’s cement unit in Tamil Nadu and Asian Concretes and Cements’ plants in Himachal Pradesh and Punjab.
Prathap Reddy had earlier looked at an IPO for his cement business but subsequently changed plans. In Oct 2021, Penna received markets regulator Sebi’s nod for a Rs 1,550-crore IPO but did not proceed with it. “Initially we thought (of an IPO) but it got delayed. I have decided to do (away) with (the cement business),” Reddy told TOI.
The businessman, known as ‘Penna’ Reddy in Hyderabad circles, was considered a confidant of former Andhra Pradesh CM YS Jagan Mohan Reddy’s father YS Rajasekhara Reddy, the unified Andhra Pradesh CM who died in a chopper crash in Sept 2009. Reddy was made an accused in the Penna chargesheet in the Jagan disproportionate assets case that is being probed by CBI and ED. Jagan’s YSR Congress Party lost the recent Andhra assembly polls to Nara Chandrababu Naidu-led Telugu Desam Party.
Incorporated in Oct 1991, Penna had a turnover of Rs 1,241 crore in FY24. In FY22, its turnover was Rs 3,204 crore. In May 2019, Penna had acquired Sri Lanka-based Singha Cement that operates a 0.5 mtpa cement packing terminal in Colombo.
Penna’s seven plants in Andhra Pradesh, Telangana and Rajasthan (under construction) and limestone reserves “provide an opportunity to increase cement capacity through debottlenecking and additional investment”, said Ambuja Cements CEO Ajay Kapur . “Importantly, the bulk cement terminals will prove to be a game-changer by giving access to the eastern and southern parts of peninsular India, apart from an entry to Sri Lanka, through the sea route,” Kapur added.





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