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Sagar Cements is planning to add 2.6 million tonnes (mt) of cement and 1.65 mt of clinker capacities with the acquisition of Andhra Cements for ₹922 crore.
Amravati Bench of the National Company Law Tribunal has recently approved a proposal of Sagar Cements to acquire Andhra Cements.
Sagar currently has a production capacity of 8.25 mt and targets to reach 10 mt capacity by FY25.
Sagar Cements’ board has recently approved an additional capital outlay of ₹470 crore for the enhancement of Andhra Cements capacity by 1.2 mt and clinker production by 0.6 mt by second half of FY25. Accordingly, the total capex stands at ₹1400 crore and the capacity comes at $56 per tonne.
“We expect capacity enhancement to generate an industry-leading volume CAGR of 24 per cent over FY22-25,” said Dharmesh Shah, Research Analyst, Emkay Research.
However, capex funding requirement would keep leverage high, with ‘net debt-to-EBITDA’ in the 3-4 times range for a couple of years, he added.
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