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Sagar Cement Ltd will be investing about ₹145 crore in its expansion. The Hyderabad-based company is looking at around ₹100 crore capex this year and during next fiscal it could be around ₹45 crore.
“This will include approximately ₹66 crore being incurred for acquisition and other associated costs of a 1,81,500 tonne grinding unit owned by Toshali Cements Private Ltd which is located in Bayyavaram, Vizag district of Andhra Pradesh,’’ Sreekanth Reddy, Executive Director, Sagar Cement told BusinessLine on Wednesday.
“This acquisition will bring down logistics cost and facilitate Sagar to introduce slag cement in parts of Andhra Pradesh and Odisha,’’ he said.
Post acquisition, Sagar proposes to scale up capacity to 3,00,00 tonnes per annum with an additional capital expenditure.
The funding for acquisition will be through internal accrual of ₹20-25 crore and the rest will be debt. Investments are also being made into a waste heat recovery project.
In August 2015, Sagar acquired BMM Cements Ltd with one million tonne capacity and 25 MW power plant in Gudipadu, Anatapur district of AP.
Gross debtAccording to Reddy, synergy benefits following BMM acquisition were gradually starting to kick in as reflected by lower freight cost for the first quarter and the same will continue to contribute ‘positively’ to the business going forward.
The gross debt of the firm on a standalone basis stood at ₹195 crore out of which ₹118 crore is long term debt and the remaining constituted the working capital.
On a consolidated basis, gross debt was ₹440 crore, out of which ₹335 crore is the long term. The debt-to-equity ratio stands at 0.61:1.
As on date, Sagar Group’s clinker capacity is at 3 million tonnes, while cement capacity is 4 million tonnes.
Sagar Cement’s scrip gained 1.48 per cent on the BSE on Wednesday to close at ₹602.35.
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