No merger, Sanghi to stay listed for now: Karan Adani

economictimes.indiatimes.com:

The Adani Group, which announced the acquisition of Gujarat-based cement maker Sanghi Industries on Thursday, plans to increase its overall cement manufacturing capacity to 140 million tonnes in the next five years. Karan Adani, director, Ambuja Cement, told ET's Deborshi Chaki and Nehal Chaliawala in an interview that the group is open to more acquisition opportunities. Edited excerpts:How did this deal come about? There are three unique things about this company.

Firstly, they have 1 billion tonnes of limestone reserves. So, the ability to add more cement capacity becomes viable. Secondly, lignite deposits are very close by, so the cost of production of clinker can be one of the lowest in the country.

Thirdly, the integrated cement unit in Sanghipuram in Kutch is just 150 km from Mundra port. Movement of clinker as well as bulk cement through seaways will allow us to serve Saurashtra, south Gujarat, Maharashtra, Karnataka and even Kerala at a low cost.What kind of ebitda accretion do you expect from this acquisition? Once we are able to produce clinker at one of the lowest costs, we believe that this plant is capable of achieving ebitda margins on a per-tonne basis similar to Ambuja and ACC. And if you see, post the acquisition of Ambuja and ACC, every quarter, ebitda per tonne has been on an upward trajectory.

So, we would be looking to run this plant at the same efficiency.This acquisition is to be funded through internal accruals. What will your liquidity position be after this? Sanghi Industries will be a debt-free company after the takeover. Ambuja and ACC combined had a cash balance of roughly Rs 11,800 crore as of Q1.