Sagar Cements shares rally 14% as co gets NCLT nod to acquire Jaypee Group's Andhra Cements

Shares of Sagar Cements soared 14 per cent in Friday's trade after the cement maker said its has received NCLT nod to acquire Jaypee Group's Andhra Cements.  The acquisition, Sagar Cements said, is aligned with strategy of consolidating presence in established markets to better serve customers in a cost efficient and timely manner. The acquisition, Sagar Cements added, will also help it meet its objective of reaching 10 million tonne capacity by 2025.

Following the development, the stock rose 14 per cent to hit a high of Rs 238.50 on BSE.

Sagar Cements estimates the acquisition cost at $56 per tonne, including upgradation. It said the cost is competitive and will help Sagar Cements create value for its stakeholders in the coming years.

"We propose to spend Rs 762 crore for acquisition, restart capex of Rs 85 crore and an additional of Rs 75 crore as working Capital and other costs. Barring unforeseen circumstances, we expect to start commercial operations by Q1FY24," Sagar Cements told BSE.

The acquisition includes Durga Cement Works (DCW),  an integrated unit of Andhra Cements, with clinker capacity of 1.65 million tonne and cement capacity of 1.8 million along with 30 MW captive power plant is located at Dachepalli, Guntur District, Andhra Pradesh.

Besides, it includes Vishaka Cement Works (VCW), a grinding unit, with cement capacity of 0.8 million tonnes located at Visakhapatnam, Andhra Pradesh.

VCW is located at a prime land of 107 acres within Vizag City limits, Shree Cements said.

The board of Sagar Cements has also approved an additional capital outlay of Rs 468 crore for enhancement of the clinker capacity to 2.3 million tonne from existing 1.65 million tonne per annum and cement capacity to 3 million tonne per annum from 1.8 million per annum at DCW.

"We are hopeful that the enhanced capacities will be commissioned during second half of FY 25. We are contemplating discontinuing the operations at the VCW due to the constraints resulting from the plant’s proximity to Vizag City," it said.

Sagar Cements said its efforts are now directed towards operating the assets at an optimum level.

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