Sanghi stock dives 10% after supply deal

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.