Sagar Cements is expecting the outcome of its proposal to acquire Andhra Cements before the third quarter end, and has identified one more candidate for a possible acquisition. Sagar Cements has earlier submitted a Resolution Plan regarding the Corporate Insolvency Resolution Process initiated by the Hyderabad Bench of the National Company Law Tribunal on an application filed in respect of Andhra Cements Ltd, a ‘corporate debtor’.
On the status of the proposal, Sreekanth Reddy, Joint Managing Director, Sagar Cements, said: “ We are more than hopeful that, at NCLT, the Andhra transaction should get concluded or there is a possibility that it should get concluded before end of Q3 is what is the impression that we have.’‘
Sagar had production capacity of 8.25 million tonnes (mt) as of end- March 2022 and aims to reach 10 mt capacity by FY25 through organic and inorganic routes. Andhra Cement has 1.65 mt for clinker and 1.8 mt for grinding at the integrated plant in Dachepalle in Guntur, and 0.8 mt grinding capacity in Visakhapatnam.
The Hyderabad-based company is prepared financially for the acquisition. “We are fully funded from Andhra perspective. We took a ₹500 odd crore of structured debt and also raised a ₹350 crore of equity from Premji Invest. We do have some internal accruals. I think these three should help us acquire the assets,’‘ he said.
The inorganic growth strategy of the company goes beyond Andhra Cements. It also identified a couple of assets. “But, we want to take one step at a time. So currently, we are more focused on Andhra. Yeah, the outcome of that would decide for the other options that we have,’‘ Reddy said.
“We do have at least another asset in our radar. But the outcome of Andhra would decide how we would progress on the other one,’‘ Reddy added.