India is experiencing a construction boom, driving demand for cement.
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Ambuja Cements, the cement unit of the group controlled by Indian billionaire Gautam Adani, approved a merger with two other companies, streamlining its cement business to expand amid a construction boom in India.
On Tuesday, Ambuja announced that its board of directors had approved a merger with Sanghi Industries. Shareholders of Sanghi will receive 12 shares of Ambuja for every 100 shares they hold. In August, Ambuja acquired 100% of Penna Cement for $1.2 billion.
“This merger aims to make our company more competitive and efficient, ultimately enhancing shareholder value,” Ajay Kapur, CEO of the cement business for the Adani Group, said in a statement. “Enhanced working capital management and internal funds will support the growth of our business operations.”
The merger of the two companies should be completed within a year after obtaining approvals from stakeholders and regulators.
The Adani Group rapidly expanded its cement business through a series of acquisitions. In 2022, it acquired Holcim’s Indian assets, which made the conglomerate the country’s second-largest cement producer.
The group’s expansion in the industry sparked fierce competition with fellow billionaire Kumar Mangalam Birla, whose Ultratech Cement is the industry leader with an annual production capacity of more than 150 million tonnes.
After the mergers, Ambuja Cements will have a capacity of 89 million tonnes from 22 manufacturing plants and 21 grinding units across the country.
Last month, U.S. prosecutors accused Adani and other executives of orchestrating a $250 million bribery scheme to secure lucrative energy contracts from the Indian government. The accusation wiped out almost $16 billion of Adani’s net worth in one week.
Adani’s net worth currently stands at $62.9 billion, according to Forbes’ real-time data. In addition to its cement operations, the Adani Group has diverse business interests in ports, airports, power generation and transmission, and green energy.
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Yessar Rosendar