Adani group-owned Ambuja-ACC and JK Lakshmi Cement are ahead in the race to acquire Ahmedabad-based Sanghi Cement which is being sold for an estimated enterprise value of Rs 6,000 crore, people familiar with the matter said.
The two frontrunners are expected to start due diligence on the company soon and, if it is satisfactory, place formal offers over the next two months, they said.
Shree Cement, Nirma Group and Dalmia Bharat had also submitted proposals to acquire a controlling stake in Sanghi Cement company, but are no longer in the running, the people said.
Sanghi Cement is controlled by the family of Ravi Sanghi, promoters of Sanghi Industries.
Sanghi Industries’ shares hit a 52-week high of Rs 93.35 on the BSE on Monday, giving the company a market capitalisation of around Rs 2,400 crore. The company’s shares have rallied 26% in the past one month.
JK Lakshmi Cement and Sanghi Cement declined to comment. Dalmia and Nirma group also declined to comment. Shree Cement confirmed it has dropped out of the race to acquire Sanghi Cement.
Ambuja-ACC, JK Lakshmi Cement and UltraTech are the top three cement players in Gujarat from where Sanghi Cement derives the bulk of its revenues.
“It’s a very strong strategic fit for Ambuja-ACC,” a person briefed about discussions on the transaction remarked. The Adani family had acquired Ambuja-ACC from Switzerland’s Holcim in May last year in a $10.5-billion deal, including the cost of open offers.
According to recently available financial data for the year ended December 31, 2022, Ambuja-ACC combine posted consolidated sales of Rs 30,000 crore. It is the second largest cement player in India after Aditya Birla Group-owned UltraTech. Ambuja-ACC are both debt free and have only obtained non-fund based facilities from banks such as bank guarantees and letters of credit, according to a recent report from credit rating agency Crisil.
In a note released on April 28, Crisil assigned a AAA rating to Ambuja Cement’s bank facilities.
JK Lakshmi Cement, which is part of the business group helmed by industrialist Bharat Hari Singhania, also has ambitious plans in the cement sector. It is looking to ramp up its cement capacities to 30 mtpa and has sufficient limestone resources in Rajasthan through mining licences that can generate annual limestone output enough to meet the capacity expansion plans.
The company has a net debt-to-Ebitda ratio of less than 1 as per a recent report by credit rating agency Crisil, which assigned AA credit rating to the company in a note released on February 1.
JK Lakshmi Cement reported revenue of Rs 5,431 crore for the year ended March 2022.
