Business

Is Adani Group Getting Its Mojo Back? Acquisition Of Sanghi Industries Signals Its Steady Recovery From Hindenburg Hit

  • On the face of it, it looks like the group has managed to have moved on from the Hindenburg report trouble. Nevertheless, stock prices have still not recovered to their peak levels, indicating that investors might still be cautious about investing in the group.

Business BriefsAug 05, 2023, 08:28 AM | Updated 08:40 AM IST
Gautam Adani

Gautam Adani


The Adani Group, hit by a short seller report in January, appears to be recovering from the attack. 

Adani-owned Ambuja Cement recently acquired Sanghi Industries, a Gujarat-based cement manufacturer. 

The Adani Group, which had been acquiring assets and growing capacities before the Hindenburg report, had temporarily put its expansion plans on the back burner. However, the Rs 5,000 crore acquisitions indicate that the group might be recovering from the setback.

Expansion Plans Appear to Be Back on Track Again

The short-seller report, released a few days before the Adani Group’s follow-on public offering (FPO) of Rs 20,000 crores, caused company shares to tank. 

While the group successfully raised funds during the FPO, it said it had decided to return funds since going ahead with the fundraising after the fiasco would be unfair to investors. 

In the following period, there were several reports of the Adani Group putting its expansion plans on hold. 

In March, the group said it would keep construction activities on the Mundhra green PVC plant on hold for six months until its financial closure by financial institutions. 

During a call with analysts, the group indicated that the PVC project was on hold. In addition, during the same call, the group said it would moderate capital expenditure on new projects. 

The entire capex on the PVC plant was expected to be in the range of Rs 35,000 crores. However, by June, media reports suggested that the company had secured a part of the project financing and the project was being revived.

Fundraising Ambitions Make a Comeback

The company also appears to have revived its fundraising plans with a recovery in stock prices. 

Adani Enterprises, the group’s flagship entity, has seen its stock price nearly double from the lows it hit after the short-seller fiasco. The group’s fundraising aspirations appear to have returned as well. 

Three group entities, Adani Green, Adani Energy Solutions (earlier Adani Transmission), and Adani Enterprises, are expected to raise around $ 4.1 billion through the qualified institutional placement (QIP) route. 


Media outlets and analysts have often questioned the lack of institutional shareholding in a company of Adani’s size. By onboarding GQG Partners as investors, it attempted to address such concerns.   

Why Did the Group Acquire Sanghi Industries?

The Rs 5,000 crore acquisition of Sanghi cement by Ambuja has come at a time when the cement sector is undergoing a lull period. 

The southern market has taken a worse hit on pricing as capacity has come up quickly while demand has slowed down. At the same time, input costs have risen significantly, but companies are unable to pass on these costs to their customers. 

Sanghi Industries is loss-making and has been facing financial troubles for a while. 

According to a credit rating report, the company completed an expansion in February 2021 but was hit by slow demand and production issues leading to difficulty paying debts. However, despite the negatives, the Adani Group might see benefits from the deal. 

For one, Sanghi Industries has a captive jetty at Sanghipuram, and its 6.1 million tonnes of cement capacity would ensure that it could even export to other countries. 

Its Sanghipuram unit is India’s largest single-location cement and clinker unit by capacity,

The company also has bulk terminals at Navlakhi Port in Gujarat and Dharamtar Port in Maharashtra.

The Adani Group has already announced plans to improve port capacity and accommodate larger vessels, while production capacity would be more than doubled over the next two years. 

Sanghi Industries also has access to 1 billion tonnes of limestone reserves. The availability of input materials, proximity to ports and major markets, and the possible synergies between existing cement businesses have catalysed the acquisition.

On a smaller scale, the Adani Group continues to pursue its longer-term plans of launching a super-app by recently acquiring “Trainman”, a ticket booking platform. 

Though Adani Labs is relatively small currently, the company’s vast consumer outreach through its consumer-oriented businesses, like electricity and gas distribution, could aid it in growing its digital footprint.

On the face of it, it looks like the group has managed to have moved on from the Hindenburg report trouble. Nevertheless, stock prices have still not recovered to their peak levels, indicating that investors might still be cautious about investing in the group.

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