Sagar Cements - Andhra Acquisition Aids To Reach 10 Mtpa Capacity: Nirmal Bang

Nirmal Bang Report

South India based cement manufacturer Sagar Cements Ltd. has an installed capacity of 8.25 million tonne (South-5.75 million tonne, Central-1 mt and East-1.5 mt).

Sagar Cements has a total captive power capacity of 66.85 mega watt. In contrast to its previous predominant exposure to South India, it has now increased its market presence in the East and Central regions as well, which are seeing rapid growth. Key highlights:

1. The resolution plan for the company's purchase of Andhra Cements, which would enable it to reach its goal of 10 mt by FY25E, has been authorized by the National Company Law Tribunal.

2. Sagar Cements will purchase an integrated operation with 1.65 mtpa clinker capacity, 1.8 mtpa cement capacity and 30 m captive power plant in the Guntur District, Andhra Pradesh (Durga Cement Works). Moreover, it will purchase a 0.8 mtpa grinding facility in Vizag, Andhra Pradesh (Viskha Cement Works.

3. Sagar Cements is considering closing this plant and may try to monetise the land in the long term. It has envisaged spending Rs 7.62 billion on this acquisition besides a capex of Rs 850 million. Also, the board has authorised an additional capex of Rs 4.7 billion to increase the Durga Cement Works unit's clinker capacity to 2.3 mtpa and cement capacity to 3 mtpa.

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