Sagar Cements to consolidate BMM acquisition by Sept

Sagar Cements Ltd will consolidate the acquisition of BMM Ltd before end of September this year.

“The ramp up for BMM is more or less complete as far as volumes are concerned. We are waiting for mining lease agreements which might happen any time and consolidation will complete by end of this quarter,’’ S Sreekanth Reddy, Executive Director, Sagar Cements, told BusinessLine here on Friday.

The Hyderabad-based Sagar Cements had acquired BMM Cements in September last year for an enterprise value of Rs.540 crore.

BMM has a one-million-tonne capacity plant at Gudipadu near Tadipatri in Anantapur district of Andhra Pradesh and limestone reserves of around 155 million tonnes.

Up to June 30, 2015, Sagar had paid Rs.150 crore to BMM.

The closure of acquisition is subject to the mining lease clearance which has to be obtained by BMM.

“We are eagerly waiting for the mining lease clearance,’’ Reddy said.

The BMM plant production is already selling under the Sagar brand. During the first quarter of the current fiscal, around 35,600 tonnes came from it out of a total of 4,35,000 tonnes. The total capacity of Sagar is 2.75 million tonnes and one million tonnes of BMM.

Once the transaction is closed, BMM utilisaiton levels are expected to be around 55 per cent of capacity.

Market strategy

In a new strategy, Sagar is not aiming for a higher market share.

“Instead of going for a higher market share, we are now trying to look at the health of the balance sheet and have decided to be more cautious about those market which would be more remunerative,’’ Reddy said.

The main markets in which Sagar is present now are Andhra Pradesh, Telangana, Maharashtra, Karnataka, Tamil Nadu and Odisha.

The demand situation in the South continues to remain soft due to low offtake from housing and rural sectors and late pick up in Government spending.

Sagar Cements posted 44 per cent increase in revenue at Rs.195 crore in the first quarter ended June 30, 2015, against Rs.135 crore in the corresponding quarter of the previous year. The profit was at Rs.22.6 crore.