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MUMBAI: Sanghi Industries has signed a supply agreement with Ambuja Cements and ACC, under which it will sell almost all its output to the two companies at a price involving a 10% markup over production cost.
The move will cap Sanghi’s profitability, analysts said, and has raised corporate governance issues among investors. The company has called for a shareholder meeting on February 8 to seek approval for the supply agreement with Ambuja and ACC. On Wednesday, the Sanghi stock fell almost 10% to Rs 134 on the BSE on the back of the unfavourable supply pact.
Bhavya Shah, an investor, posted on X: As per industry average, cement is sold at cost plus 25-30% markup, translating to an operating profit per tonne of Rs 1,100-1,200. In case of Sanghi, cost plus 10% markup would mean a realisation of Rs 360 per tonne. Had it sold its cement in the open market, it would get a better realisation. Sanghi, Ambuja and ACC are all majority owned by Adani Group.
The move will cap Sanghi’s profitability, analysts said, and has raised corporate governance issues among investors. The company has called for a shareholder meeting on February 8 to seek approval for the supply agreement with Ambuja and ACC. On Wednesday, the Sanghi stock fell almost 10% to Rs 134 on the BSE on the back of the unfavourable supply pact.
Bhavya Shah, an investor, posted on X: As per industry average, cement is sold at cost plus 25-30% markup, translating to an operating profit per tonne of Rs 1,100-1,200. In case of Sanghi, cost plus 10% markup would mean a realisation of Rs 360 per tonne. Had it sold its cement in the open market, it would get a better realisation. Sanghi, Ambuja and ACC are all majority owned by Adani Group.
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