Sagar Cements gets board approval to buy BMM Cements1 min read . Updated: 25 Sep 2014, 11:58 AM IST
After the acquisition, cement produced from BMM plant is proposed to be marketed under the 'Sagar' brand
Mumbai: The board of Hyderabad-based Sagar Cements Ltd has given in-principle approval to buy 100% stake in privately-held BMM Cements Ltd. The deal size will be finalized after further negotiations, Sagar informed stock exchanges.
BMM, with limestone reserves of around 155 million tonnes, has an enterprise value of ₹ 540 crore, Sagar said. It owns a 1 million tonne per annum (mtpa) cement factory and a 25MW captive thermal power plant in Gudipadu near Tadipatri Anantapur district in Andhra Pradesh.
“The proposed acquisition of BMM Cements comes at an opportune time wherein the demand environment and pricing in our region of operations looks encouraging," said Sreekanth Reddy, executive director at Sagar. “We intend to continue to drive growth and explore both inorganic and organic opportunities that will enhance long-term stakeholder value."
If the acquisition is successful, Sagar’s capacity will go up to 3.75 mtpa from the current 2.75 mtpa. After the acquisition, cement produced from BMM plant is proposed to be marketed under the ‘Sagar’ brand, Sagar said.
India’s cement industry will see consolidation due to limited limestone reserves in the country, analysts say. Half of the country’s limestone reserves are in South India, and any new plant would require access to these, said a 28 May report by Barclays Research.
Limestone is a key input in manufacturing cement.
On Wednesday, shares of Sagar fell 2.9% to ₹ 340 a share on the BSE while India’s benchmark Sensex fell 0.12% to close at 26,744.69 points.