Ambuja Cements, a company within the Adani Group, has successfully secured 24 new limestone mines in the fiscal year 2024. This acquisition, detailed in the company’s latest annual report, brings an estimated 587 million tonnes of limestone resources under its control. The move is part of Ambuja Cement's aggressive expansion strategy aimed at bolstering its resource base.
This significant addition complements the 1 billion tonnes of limestone reserves acquired through the purchase of Sanghi Industries, a Saurashtra-based firm, last November. The acquisition of Sanghi Industries came at an enterprise value of Rs 5,185 crore.
The annual report emphasises the importance of these acquisitions for the company's self-sufficiency, particularly in securing essential raw materials. "Winning bids for coal and limestone mines is critical to ensure self-sufficiency, with coal mines in Dahegaon-Gowari and the existing Gare Palma coal block catering to 40 percent of Ambuja Cements Ltd (ACL) coal requirements," the report states.
Ambuja Cement's aggressive acquisition strategy aligns with the Adani Group's ambition to achieve a production capacity of 140 million tonnes per annum (MTPA) by 2028. The group is well-positioned financially to meet this target through both brownfield expansions and strategic acquisitions.
In a related development earlier this month, the Adani Group announced the acquisition of Hyderabad-based Penna Cement. This acquisition, valued at Rs 10,422 crore, is set to add 14 MTPA to Ambuja Cement’s capacity, increasing its total to 89 MTPA. This deal, conducted entirely in cash, will enhance ACL's market share in southern India and facilitate its entry into the Sri Lankan market.
During an analyst call post-acquisition, ACL CFO Vinod Bahety highlighted the company’s robust financial health. He noted that despite the significant outlay for Penna Cement, ACL would still hold around Rs 10,000 crore in cash by year-end. "Since you all know that we have been sitting on good cash and cash equivalent, it will be a good deployment of this amount and earning much more than 15 percent in terms of ROCE (Return on Capital Employed)," Bahety stated.
Furthermore, Bahety affirmed that the entire acquisition would be financed through cash and cash equivalents, ensuring the company's strong liquidity position. He projected that ACL would retain substantial cash reserves even after the acquisition, positioning it well for future opportunities.
In addition to expanding its resource base, Ambuja Cement is also increasing its investment in alternative fuels and green power, underscoring its commitment to sustainable growth and environmental responsibility.
