Sagar Cements, based in Andhra Pradesh, is reportedly planning to acquire BMM Ispat Group’s cement assets. The enterprise value of the deal is estimated to be around Rs.500 crore. According to local press reports, the purchase of BMM Group’s 1 million tpa manufacturing plant in Tadipatri, located in Andhra Pradesh’s Anantapur district, would take Sagar Cements’ cement production capacity from 2.75 million tpa to approximately 3.75 million tpa.
The acquisition would result in the company gaining easier access to southern markets and would significantly reduce freight charges (by over 40%). Reports indicate that the purchase is likely to be finalised at the company’s annual general meeting, which is scheduled to be held on 24 September.
Reports suggest that French cement manufacturer Vicat is planning to purchase Sagar Cements’ 47% share in its joint venture company; however, Sagar Cements has since denied this claim.
Freight, fuel and power costs are pushing up cement prices in India, causing complaints from the Confederation of Real Estate Developers’ Associations of India, which is threatening to go to the CCI.