Hyderabad-based cement manufacturer Sagar Cements Ltd is buying BMM Cements Ltd at an enterprise value of Rs 540 crore ($90 million). Sagar Cements' board has given its in-principle approval for the proposed acquisition, as per a stock market disclosure.
BMM Cements, which owns a cement plant with capacity of 1 million tonne per annum and a captive thermal power plant of 25 MW capacity near Tadipatri in Anantapur district in Andhra Pradesh, also has limestone reserves of around 155 million tonnes.
“The proposed acquisition of BMM Cements comes at an opportune time wherein the demand environment and pricing in our region of operations looks encouraging. The two companies are wholly complementary geographically with considerable potential for synergies. We intend to continue to drive growth and explore both inorganic and organic opportunities that will enhance long-term stakeholder value,” Sreekanth Reddy, executive director, Sagar Cements, said.
Once the acquisition is completed, the Sagar Cements group’ total cement capacity will go up to 3.75 million tonnes per annum from its existing capacity of 2.75 million tonnes per annum.
Also, the company will market the cement produced from BMM plant under the brand ‘Sagar’ and leverage its marketing and distribution network to enhance its production capacities, reduce overheads and reach out to wider markets.
Earlier in July, Sagar Cements struck a deal to sell 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). This transaction was completed recently.
At the time of announcement, Sagar Cements said that it would use a part of the money to purchase some capital equipment for its Mattampally 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.
Founded in 2007, Anantapur-based BMM Cements is engaged in manufacturing and marketing of portland cement, portland blast furnace slag cement and portland pozzolana cement. It offers producing of cement in different grades.
Sagar Cements manufactures various varieties of cement and sells them under the brand name Sagar. Its plant is located in the Nalgonda district in Telangana.
(Edited by Joby Puthuparampil Johnson)