Billionaire Gautam Adani’s conglomerate, the Adani Group, has announced the merger of its newly acquired cement operation units, Sanghi Industries Ltd. and Penna Cement Industries Ltd., with Ambuja Cements Ltd. The move is designed to streamline the group’s cement business, which plays a crucial role in supporting India’s growing infrastructure sector.

The board of Ambuja Cements, which is controlled by the Adani Group, approved the merger on Tuesday. According to an exchange filing, Ambuja Cements will issue 12 shares for every 100 shares of Sanghi Industries to its shareholders, while offering Rs. 321.50 ($3.78) per share to acquire Penna Cement shares that it does not already own. The deal aims to streamline operations and achieve cost savings in an industry where margins are often squeezed due to intense competition.

The merger is expected to be completed within a year, subject to approval from stakeholders and regulatory authorities.

The consolidation aims to bring the production of the building material under one umbrella, creating a more efficient and competitive operation. The merger follows the Adani Group’s acquisition of Sanghi Industries and Penna Cement over the past two years, as part of its aggressive expansion in the Indian cement industry.

The consolidation is expected to provide the Adani Group with greater scale and cost efficiencies. Ambuja became the second-largest cement producer in India after the Adani Group acquired Holcim Ltd.'s Indian assets in 2022. The merger will now further enhance Ambuja’s market share to compete with industry leader UltraTech Cement, owned by billionaire Kumar Mangalam Birla.

This merger is part of the Adani Group’s broader strategy to bolster its cement business, which has become a critical component of its portfolio.

Ambuja Cements shares rose as much as 1.4% during Tuesday’s trading in Mumbai, before erasing those gains. Sanghi Industries’ shares, however, fell sharply, losing up to 13% and touching their lowest point since June 2023, signaling that the market was not entirely satisfied with the proposed swap ratio.

India’s demand for cement is expected to rise significantly in the coming years, driven by massive government infrastructure projects, including roads, housing, and industrial development.

Once complete, this consolidation will not only strengthen Ambuja Cements’ position in the market but also make the Adani Group a more formidable competitor in India’s cement sector, enabling it to better rival the likes of UltraTech Cement and Shree Cement, and potentially increase its reach in global markets as well.