Hyderabad-based cement manufacturing firm Sagar Cements Ltd (SCL) is selling its entire stake in its joint venture (JV) Vicat Sagar Cement Pvt Ltd to France-based Parficim SAS, an affiliate of Vicat SA, for Rs 435 crore ($72.3 million), as per a stock market disclosure.
The board of the directors of the company has approved the sale of its entire 6,52,36,399 equity shares held in its JV for Rs 66.68 per share.
Sagar Cements would use a part of the money to purchase some capital equipment for its Matampally plant, while the remaining amount will be deployed to fund organic and inorganic growth for playing a larger role in the cement industry in South India.
In June 2008, Sagar Cements and Vicat had formed a JV to set up a 5.5 million tonne plant in Gulbarga in Karnataka. The first phase of the plant was completed in December 2010 and it started producing 2.75 million tonnes of cement.
Sagar Cements invested Rs 86 crore for the first phase to take 47 per cent stake in the JV.
“This transaction will enable both Vicat and Sagar to better focus on their own strengths and strategies," said Sreekanth Reddy, executive director, Sagar Cements.
Verus Advocates advised on the structuring of the transaction and is legal counsel to Sagar Cements.
Sagar Cements manufactures various varieties of cement and sells them under the brand name Sagar. The company’s current clinker capacity is 2.3 million TPA and its cement capacity is 2.75 million TPA. Its plant is located in the Nalgonda district in Telangana.
Sagar Cements' scrip was trading at Rs 353, up 4.72 per cent on BSE in a strong Mumbai market on Wednesday at 11.20 AM.
Privately held Vicat SA is engaged in the production and sale of cement, ready-mix concrete, aggregates, concrete pipes and mortar. The firm employs more than 7,700 people in 11 countries.
With this acquisition, the firm now has two plants in India. In 2010, it acquired 51 per cent stake in Hyderabad-based Bharathi Cement Corp Ltd for an undisclosed amount.
This marks the third deal in the domestic cement sector since January. Early this year KKR-backed Dalmia Cement (Bharat) struck a deal to buy 74 per cent held by Jaiprakash Associates in its cement joint venture with steel maker SAIL for Rs 690 crore ($113 million).
In another transaction, Chettinad Cement entered into a share purchase agreement to acquire majority stake in Hyderabad-based Anjani Portland Cement Ltd.
Globally, Lafarge and Holcim decided to merge to create a cement behemoth with the number one position in India.
(Edited by Joby Puthuparampil Johnson)