Sanghi Industries shares tumble 12% on merger with Ambuja Cements

Shares of Sanghi Industries slumped 12.4% on Wednesday to Rs 67.42 on BSE after the company’s promoter Ambuja Cements said it will issue 12 shares for every 100 shares of Sanghi Industries under a merger scheme.

Ambuja Cement said on Tuesday that it will merge its acquired companies— Sanghi Industries and Penna Cement Industries— with itself, under separate schemes of arrangement for the subsidiaries.

Ambuja Cement as the promoter of the Sanghi Industries, holding 58.08% of equity, said that under the scheme of arrangement with Sanghi Industries, shareholders will get 12 shares of Ambuja for every 100 shares held in Sanghi.

In a scheme of arrangement with Penna Cement, Ambuja will pay Rs 321.5 per share for Penna Cement.

Ambuja Cements completed the acquisition of Sanghi Industries in December 2023, at a revised enterprise value of Rs 5,185 crore.

After a series of acquisitions, Ambuja Cements plans to increase its total cement production capacity to over 100 MTPA by the end of this fiscal. In the recent second quarter, Ambuja signed an agreement with Orient Cements to acquire 46.8% equity in the company.”As both the companies are under the same line of business, this amalgamation will enable us to absorb the business of Sanghi Industries completely for carrying on more effectively and beneficially,” Ambuja said in a filing.Aimed at enhancing shareholder value, this consolidation is likely to help to streamline the organisation structure and simplify compliance requirements for effective governance.

Sanghi Industries has a clinker capacity of 6.6 MTPA, cement capacity of 6.1 MTPA, and limestone reserves of 1 billion tonnes. Its Sanghipuram plant is India’s largest single-location cement and clinker unit by capacity, with a captive jetty and captive power plant.

Unified cash flow management post the merger is expected to pool resources for Ambuja for faster expansion and cost savings in administration and governance, thereby simplifying compliance requirements.

Ambuja Cements, the country’s second-largest producer of cement, has an annual production capacity of 89 million tonnes, which it is planning to increase to 140 million tonnes by 2027-28.

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