Adani Group's Ambuja Cements is doubling its cement empire. On Tuesday, the company announced the merger of its subsidiaries Sanghi Industries and Penna Cement Industries to streamline operations and strengthen its market position.

Under the proposed scheme with Sanghi Industries, shareholders will get 12 Ambuja Cements shares for every 100 shares of Sanghi. Ambuja, the promoter that already holds a 58.08% stake in Sanghi, is looking to fully integrate the business to drive efficiency and growth.

The move is aimed at a major increase in production capacity by Ambuja Cements. After the merger, Ambuja's capacity is expected to cross 100 million tonnes per annum (MTPA) by the end of the financial year. It currently produces 89 MTPA with a big roadmap to reach 140 MTPA by 2027-28.

Ajay Kapur, CEO of Adani Group's cement business, described the merger as a strategic leap: “This merger aims to make our company more competitive and efficient, ultimately increasing shareholder value. Improved capital management and internal funds will support the growth of our business operations."

Sanghi Industries brings considerable firepower to the table, including India's largest single-location cement and clinker unit at Sanghipuram, Gujarat, with a clinker capacity of 6.6 MTPA and limestone reserves of 1 billion tonnes. The site's integrated dock and captive power plant further reinforces its operational advantage.

Penna Cement adds scale in South India with four integrated plants in Andhra Pradesh and Telangana and a grinding unit in Maharashtra. Operating at a capacity of 10 MTPA, two additional plants are under construction at Krishnapatnam and Jodhpur, each ready to add 2 MTPA within a year.

Ambuja believes the merger will simplify fulfillment, unlock cost efficiencies and unify cash flow management for faster expansion.

On Tuesday, Ambuja Cements shares fell nearly 1% to close at ₹571.50 on the NSE.